Five Important Charts To See Right Now

Posted by lplresearch

Wednesday, December 15, 2021

As we head into the end of 2021, here are five charts that caught our attention.

First up, last week was one of the best weeks of the year for stocks, and that could be a good sign. “It turns out that big weeks like last week usually have the bulls smiling,” explained LPL Financial Chief Market Strategist Ryan Detrick. “23 out of the past 25 times the S&P 500 Index gained at least 3.8% in a week, it was higher three months later.”

As shown in the LPL Chart of the Day, the S&P 500 closed up more than 3.8% in a week on 25 occasions since March 2009, with last week being number 26. As you can see, the future returns 1-, 2-, and 3-months out are extremely strong.

View enlarged chart.

Second, we are nearing the second half of December, which historically is when stocks tend to do well during this usually bullish month. In fact, returns actually get better if the S&P 500 is negative in November (check) and up more than 20% heading into the final month of the year (check).

View enlarged chart. 

Third, the second year of the Presidential Cycle tends to be the worst of the four-year cycle and it is up the least often as well. Although we expect stocks to still do well in 2022, this is a reminder it likely won’t be another run-away bull market like we saw in 2021.

View enlarged chart.

Breaking this down by new Presidents versus re-elected Presidents and it is quite clear that year 2 under a new President historically has been quite weak. Then again, this said year 1 shouldn’t be very good and that sure hasn’t been the case this year.

View enlarged chart. 

Lastly, breaking things down by quarters, it becomes very clear the next three quarters are some of the worst of the four-year cycle, before a very strong fourth quarter.

View enlarged chart.

For more of our thoughts on these things, along with the Fed meeting, inflation, and more, please watch our latest LPL Market Signals podcast below or directly from our YouTube channel.


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