In the famed Stock Traders Almanac, author Jeffrey Hirsch shares statistics on how September is the worst month of the year for stocks. Investment commentators love to site these facts to get people on edge.
However, as you dig into the stats you find its all pretty benign including the fact that stocks actually rise about half the time. There were just a few really bad plunges that occurred in September, like the Financial Crisis of 2008, which pull down the average monthly return.
As we close the books on September 2024 the S&P 500 (SPY) tallied another +2.1% gain to make new record highs at 5,762. This leaves just one quarter to go on this quite bullish year of 2024. So let’s discuss what likely happens from here.
Market Outlook
My thoughts on 2025 have been well spelled out in my ongoing commentary. With my most complete view and trading plan shared in this recent presentation: 2025 Stock Market Outlook.
However, I haven’t spoken enough on the near term outlook for stocks. For example, what do I expect into the year end?
Right now, I see 3 catalysts in play to have stocks making new highs before we close the books on 2024.
First, and most important, is that we are clearly in a bull market cycle. The recent decision to cut rates only solidifies this view as lower rates in the future should bolster the economy which begets higher corporate earnings...and that is a pretty natural elixir that creates higher share prices.
The second catalyst on the horizon is the likely surge that comes after the Presidential election. Historically stocks explode higher in the wake of the election because the uncertainty over who wins has been removed. This has more investors hitting the buy button.
To be clear, history shows it makes no difference who wins. Democrat or Republican the market applauds the removal of the question mark with a hefty rally.
The third and final catalyst to close out the year is the typical Santa Claus rally. This is such a time honored tradition explaining why December is historically one of the best months of the year for stock investing.
The sum total of these catalysts gives us a real shot to hit 6,000 for the S&P 500 this year. That would point to an additional 4.1% gain for the index which is quite doable in that time frame.
It also wouldn’t surprise me to see the small cap index, Russell 2000, do 2X better than their large cap peers as they continue to play catch up after a long time of large company dominance.
For as wonderful as all that sounds, I think the above is the last serious surge for the S&P 500. As shared in my 2025 Stock Market Outlook, we will be entering year 3 of this bull market which historically has led to tame results.
I believe that 6,000 will prove to be an area of strong resistance that we wrestle with all of next year. This is another way of saying don’t expect the Magnificent 7 to be the “Easy Button” for investing as it has the last several years.
The valuations for these stocks are 50 to 100% above what is considered fair value based on their earnings outlooks. So I don’t expect them to crash. Instead I expect them to go for a year or two where earnings rise to help bring valuations a bit more down to size.
This also means that investors will have to put in a little more work to find stocks likely to outperform. OR they can lean into proven systems like the POWR Ratings from StockNews which does the hard work for them by analyzing 118 different fundamental factors for 5,300 stocks every day.
The top 5% of those stocks are A rated which has led to serious outperformance, +28.56% average annual return going back to 1999. And yes, it continues to generate great returns in 2024 as well.
Read on below to find my favorite POWR Ratings stocks at this time...
What To Do Next?
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Wishing you a world of investment success!
SPY shares rose $0.02 (0.00%) in after-hours trading Tuesday. Year-to-date, SPY has gained 20.76%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.
End of 2024 Stock Market Prediction StockNews.com
