Strong May supports a bullish 2024 outlook for S&P 500: Stock Trader's Almanac

Despite recent market weakness, the S&P 500 posted a 4% gain in May, recouping losses from April. According to the latest newsletter from Stock Trader's Almanac, if the market holds steady, this May will rank as the 10th best since 1950, an impressive feat for a typically weak month.

The firm said that historically, a strong Mays supports a bullish outlook for the rest of the year, bolstering confidence in a positive 2024.

The newsletter highlights that since 1950, only two years with May gains exceeding 3% ended in the red: 1957 and 1990.

Notably, election years 1980 and 2020 saw significant gains, with the last seven months up 22% and 23.4%, respectively, leading to full-year increases of 25.8% and 16.3%.

This pattern suggests that a robust May often precedes a strong finish to the year, with a historical 70% chance of positive returns averaging 8.6%.

Stock Trader's Almanac maintains its Annual Forecast Base Case Scenario for 8-15% gains, with a best-case scenario for 15-25% potentially in play. The report also notes that markets perform better when the incumbent party retains power, contributing to this year's gains.

Despite unique political dynamics, with two candidates seeking second terms amid ongoing legal issues, the firm notes that the market has remained resilient.

Reduced uncertainty regarding potential policies and agendas from both known candidates has likely contributed to the market's performance. The newsletter suggests that after potential volatility in June and July, bullish forces typically strengthen post-conventions, pushing the market higher towards year-end.

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