The US S&P 500 stock index has been on a tear in recent weeks, adding a nifty 6.22% from the lows of November 4.
At 2,213.35, it currently sits at the highest level on record.
And, if the chart below is anything to go by, the recent rally could be a sign of things to come over the next few weeks should prior patterns be maintained.
Courtesy of Topdown Charts, it shows the seasonal pattern of the S&P 500 going back to 1990, comparing that to movements in the index in 2016.
If you think they look similar, you’d be right.
While past performance is no guarantee of future returns, it’s undeniable that we’re now approaching what is traditionally a strong seasonal period for stocks.
It’s referred to as the “Santa Rally” among some investors, a period that’s defined by reduced volumes, reduced volatility and, in many instances, market gains.
Often it’s fueled by buying on the premise that others will do the same.
Should this be reflected in the price action over the weeks ahead, it suggests that there’ll be a few more closing records set before the year is out.
You can follow Topdown Charts on Twitter at @topdowncharts.
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