Synopsis:

BofA highlights Thanksgiving week as a historically strong period for the S&P 500 (SPX), with even stronger performance during Presidential election years. While post-Thanksgiving dips are common, the end of the year typically sees strong gains, suggesting a potential buy-the-dip opportunity.

Key Points:

• Thanksgiving Week Returns:

  • SPX has risen 60% of the time during Thanksgiving week since 1928, with an average return of 0.28% and a median return of 0.46%.
  • This compares favorably to an average weekly SPX gain of 0.14% (median 0.30%) for all weeks since 1928.

• Post-Thanksgiving Trend:

  • Historically, the week after Thanksgiving shows muted or negative returns, averaging -0.01% (median 0.15%) and rising 53% of the time.
  • However, the Thanksgiving-to-New-Year period is significantly stronger, with SPX rising 71% of the time, averaging a 1.46% gain (median 1.70%).

• Election Year Strength:

  • Thanksgiving week in Presidential election years has shown even better performance, with SPX up 75% of the time, averaging 0.88% (median 1.08%).

Conclusion:

Thanksgiving week has historically been a favorable period for the S&P 500, particularly during election years. While a short-term dip post-Thanksgiving is common, the end-of-year rally suggests a buy-the-dip strategy may be beneficial for investors looking to capitalize on seasonal trends.