While big caps managed to finish the week with slight gains, small cap stocks were not able to keep pace as the Russell 2000 lagged and finished the week down 1.6%.
With 4 trading weeks left in 2015, here's where the domestic indexes stand:
As has been the story for most of the year, the Nasdaq has been the only source of returns for the US stock market.
We're sure you've seen plenty of year-end / "Santa rally"-type commentary over the last week so we'll resist from saying too much. Steve Deppe, of Nerad & Deppe Wealth Management, offered up some interesting observations on the typical December and they became more compelling as the week unfolded. He said:
"Since
1950, the calendar month of December has closed higher 75.38% of the time with
average returns of 1.67% (using the S&P 500 as a proxy). The average
monthly draw up for December the last 65 years, as defined by measuring
December’s high from November’s close, is 3.22%. With Monday’s close at
2,080.41, this would target a December high of 2,147.39.
If
history is any guide, it’s reasonable to expect new all time highs in December.
Will
these highs demonstrate sustainability? That’s the trillion-dollar question.
December’s average drawdown, as defined by measuring December’s low from
November’s close, is -2.24%. However, the median December drawdown is just
-1.28%. Normalized December weakness would target a December low anywhere
from 2,033 to 2,053. A pullback to this price level is not a reason to call a
top, panic, or think the next correction is underway."
The market's lows on Thursday and Friday fell squarely into Deppe's suggested range of 2,033 - 2,053 for a "normal" pullback that could be expected at some point this month. If history holds in this case, the lows for the month may be in and the market could be looking to challenge all-time highs before year-end.
