Stocks Could Climb in December and Beyond: Carson’s Detrick

Mid-October appeared to mark the bear market trough and stocks may well move higher in December, according to Carson Group Chief Market Strategist Ryan Detrick.

“We continue to think the mid-October lows were the lows from the bear market, and continued good times could be coming,” Detrick said on the firm’s blog Wednesday. On Thursday, he added another blog post detailing what he said were five good signs for bulls for 2023.

December is historically considered one of the best months for investors, with the S&P 500 having its worst month in December only once, he said. Stocks are up in December over the past decade, even with a massive drop in 2018, Detrick wrote Wednesday.

When stocks are up in both October and November — the situation this year — “the S&P 500 doesn’t do quite as well in December, up 0.75% on average compared with the average December return of 1.54%, suggesting the prior months could be taking some of December’s historical strength,” he added.

The S&P 500 closed up more than 3% Wednesday, reaching a two-month high of 4,080, as stocks surged after Federal Reserve Chairman Jerome Powell indicated the central bank would slow its rate hiking pace. Detrick posted his comments before the market close.

After the close, Detrick tweeted that the S&P 500 finished above its 200-day moving average for the first time in seven months. In the 13 previous times the index held below this trendline for at least six months and then closed higher, it fell to new lows only once, was higher 12 times and had climbed an average 18.8% a year later, he said.

The Dow was about 6.5% away from new highs, Detrick tweeted. “The good news is those that followed their investment plans and didn’t cave to the nonstop bearish takes are feeling pretty good today [and tomorrow],” he said.

With inflation likely peaking, the U.S. dollar weakening, a potentially more dovish Fed, investors bearishly positioned, broadening market participation, a stronger-than-expected consumer, and crude oil now near flat for the year, Detrick wrote Wednesday, “there are many former headwinds, which have now become potential tailwinds. When all is said and done with 2022, we wouldn’t be surprised to see this year end higher than where it is today.”

On Thursday, Detrick tweeted that the recent S&P 500 bear market, which he defines as lasting from Jan. 22 through Oct. 22, was about average with a 25% decline, compared with an average 30% drop for all bear markets since 1957 and a 24% fall for bear markets without recessions.

In his follow-up post, he suggested 2023 “should be a bounce-back year for stocks” and noted the S&P 500 has seen back-to-back yearly losses only twice in the past 50 years. He also noted, among other points, that when the index is down in a midterm election year, it tends to do very well the following year.