January 4, 2019

Trump’s pronouncement of last month’s market action as a “glitch”, reminds me of Monty Python and the Holy Grail.

A well-known scene in that film depicts a sword fight between King Arthur and the Black Knight – the latter of whom, according to Wikipedia, “suffers from unchecked overconfidence and a staunch refusal ever to give up.”

As he is being utterly beaten by King Arthur, the Black Knight fails to recognize the seriousness of the situation – referring to his lost limbs as flesh wounds and scratches. It sounds like the Black Knight would be good at writing tweets on behalf of Trump.

The fact of the matter is, when the stock market reaches new lows at the end of the year (in December when we normally see rallies), the picture for the following year is most often terrible. As the chart below indicates, the stock market has been down by18% on average during the years following those in which new lows were reached in December.

Despite poor risk signals since November, I had hoped to see a Santa Claus rally going into the end of the year and to watch out for positive stock action in January. Unfortunately, Santa never showed up this year for stocks, and that may be a worse sign than ever.

When The Stock Market Makes New Lows in December
The Following Year Is Not Pretty!

1927 to 2018

Year of December
Low (Date)
The Following Year's S&P 500 Returns
Q1 Q2 Full Year
12/17/1930 1931 Yes -8.80% 3.32% -47.07%
12/17/1931 1932 Yes -9.98% -45.44% -14.78%
12/29/1941 1942 No -7.83% -4.49% 12.43%
12/14/1973 1974 Yes -3.66% -11.84% -29.72%
12/20/2000 2001 Yes -12.11% -7.26% -13.04%
12/17/2018 2019 ??? ??? ??? ???
Average     -8.48% -13.14% -18.44%

Source: The Chart Store (

Chart sourced via:

The views/opinions expressed herein may not necessarily be the views of Horizons ETFs Management (Canada) Inc. All comments, opinions and views expressed are of a general nature and should not be considered as advice to purchase or to sell mentioned securities. Before making any investment decision, please consult your investment advisor or advisors.

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