The stock market is on the verge of a rare bullish trifecta that suggests big upside ahead

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Spencer Platt/Getty Images


© Spencer Platt/Getty Images
Spencer Platt/Getty Images

  • US stocks could be on the verge of a rare bullish trifecta that signals more upside ahead, according to Carson Group’s Ryan Detrick.
  • To complete the trifecta, the S&P 500 needs to generate a positive return in the month of January.
  • “We continue to see more positives than negatives, and we think 2023 could actually be quite a good year for investors,” Detrick said.

The stock market is on the verge of completing a rare bullish trifecta that suggests big gains in 2023, according to a Thursday note from Carson Group’s Ryan Detrick.

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The trifecta consists of the S&P 500 generating positive returns during three overlapping periods at the start of the year.

The first period is the “Santa Claus rally” trading window, which consists of the last five trading days of the year and the first two trading days of the new year. The second trading window is the first five trading days of the year, and the third period is the entire month of January. 

The S&P 500 has completed this trifecta 31 times since 1950, according to Detrick, and what usually followed was bullish for the market. The average full-year S&P 500 gain of those 31 years was nearly 18%, with a win ratio of 90%.

However, an even rarer occurrence is for the market to nail the trifecta following a year of negative returns like stocks saw in 2022. In that case, the hat trick has only been seen nine times. 

In those nine years, the S&P 500 delivered an average return of 27% with a 100% win ratio. This scenario most recently happened in 2019, and then 2012, in which the S&P 500 finished the year up 29% and 13%, respectively.

The S&P 500 delivered a 1.4% gain during the Santa Claus trading window, a positive 0.8% gain in the first five trading days of 2023, and is so far up 4% in the first two weeks of January. As long as the market can hold on to some of its gains through month-end, the trifecta will be complete.

“This month isn’t over yet, but we are off to a great start, and a higher January could be in the cards. If you are bullish, you should be rooting for a green January,” Detrick said. “There are still many worries out there, but we continue to see more positives than negatives, and we think 2023 could actually be quite a good year for investors.” 

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