December Typically Starts Out Weak

December typically starts out weak as tax-loss selling ramps up and with the big gains this year we would expect that early December weakness to materialize. Then as you can see in the typical December chart here stocks begin to takeoff around mid-month led by small caps and the Russell 2000.

This is what used to be known as the “January Effect:” small caps outperforming large caps in the month of January. Nowadays most of the so-called January Effect takes place in the last half of December (2021 Almanac pages 110 & 112, 2022 pages 112 & 114). The January Effect is not to be confused with the January Barometer (2021 Almanac page 16, 2022 page 18), which states as the S&P 500 goes in January, so goes the year.

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