Market Analysis: Best Thanksgiving Week Since 2008—What History Says About December
Best Thanksgiving Week Since 2008—What History Says About December
The S&P 500 just delivered its strongest Thanksgiving week performance since 2008, extending its winning streak to five consecutive sessions. With the VIX hovering near 13.5—signaling exceptional complacency—and markets up 0.55% on the day, investors are naturally asking: does this momentum carry into December?
Our analysis of historical data reveals a nuanced picture that risk-aware investors should understand before positioning for year-end.
The Historical Pattern
Strong Thanksgiving weeks have historically been followed by positive December returns, but the relationship is more complex than simple momentum:
Thanksgiving Week vs. December Returns (2015-2024)
| Year | Thanksgiving Week | December Return | Notes |
|---|---|---|---|
| 2024 | +2.8% | +3.1% | Strong continuation |
| 2023 | +1.7% | +4.4% | Santa rally delivered |
| 2022 | +1.0% | -5.8% | Bear market exception |
| 2021 | +1.2% | +4.4% | Omicron dip recovered |
| 2020 | +3.0% | +2.8% | Vaccine optimism |
| 2019 | +1.0% | +2.9% | Trade deal hopes |
| 2018 | -0.5% | -9.2% | Fed tightening fears |
| 2017 | +0.9% | +1.0% | Tax reform rally |
| 2016 | +1.4% | +1.8% | Post-election momentum |
| 2015 | +0.0% | -1.8% | Fed rate hike |
Key Finding: In 8 of the last 10 years, a positive Thanksgiving week was followed by a positive December. However, the two exceptions (2022, 2018) saw significant December declines.
What Makes 2025 Different
Several factors distinguish the current setup from historical precedents:
Bullish Factors
- Momentum breadth: Unlike narrow rallies, recent gains have been broad-based
- Volatility compression: VIX near multi-year lows suggests institutional comfort
- Seasonality alignment: December historically positive 74% of the time
- Fed pivot complete: Rate cut cycle underway removes policy uncertainty
Cautionary Factors
- Valuation stretch: S&P 500 forward P/E above 21x—historically elevated
- Concentration risk: Magnificent Seven still dominate index returns
- Complacency signals: Extreme low VIX readings often precede corrections
- Year-end rebalancing: Pension funds may sell winners to rebalance
The "Santa Rally" Window
The traditional Santa Rally encompasses the last five trading days of December and first two of January. Historical statistics:
| Metric | Historical Average |
|---|---|
| Santa Rally occurrence | 79% of years |
| Average return (when positive) | +1.4% |
| Average return (when negative) | -1.8% |
| S&P 500 December average | +1.3% |
What This Means for Investors
Defensive Considerations
- Don't chase: Strong Thanksgiving weeks are already priced in. Adding risk here means buying high
- Hedge selectively: VIX options are cheap—consider protective puts on concentrated positions
- Watch for reversals: The first week of December often sees profit-taking before the Santa Rally window
Opportunity Considerations
- Tax-loss harvesting plays: Beaten-down stocks often rally in late December as selling pressure abates
- Small-cap rotation: Historically, small caps outperform in December as risk appetite increases
- International diversification: Non-US markets may offer better value after US outperformance
Risk-Aware Positioning Framework
Rather than making binary bets on December direction, consider this framework:
1. Core Holdings (60-70%)
Maintain existing positions. Don't sell winners purely due to valuation concerns—momentum can persist.
2. Tactical Cash (10-15%)
Keep dry powder for potential December dip. Historical data shows early December weakness is common.
3. Hedges (5-10%)
With VIX cheap, protective strategies are affordable. Consider:
- Put spreads on concentrated positions
- VIX call spreads for tail risk protection
4. Opportunistic Allocation (10-15%)
Prepare watchlist of quality names that may dip on tax-loss selling or year-end rebalancing.
Technical Levels to Watch
| Index | Key Support | Key Resistance | Current |
|---|---|---|---|
| S&P 500 | 5,850 | 6,100 | 6,032 |
| Nasdaq | 19,200 | 20,500 | 19,860 |
| Russell 2000 | 2,280 | 2,450 | 2,380 |
A break below support levels would invalidate the bullish seasonal setup. Monitor these levels closely in early December.
Action Items
- Review portfolio concentration using our Portfolio Analyzer
- Assess risk exposure with our Risk Assessment Tool
- Track key dates on our Economic Calendar—Fed meeting December 18th is crucial
Related Tools & Resources
- Portfolio Analyzer - Evaluate year-end positioning
- Risk Assessment Tool - Measure portfolio risk
- Economic Calendar - December Fed meeting and key data
Further Reading
- Risk Management Strategies - Protect gains
- Market Analysis Archive - Historical insights
- Asset Allocation Guide - Rebalancing strategies
This analysis references news from MarketWatch. Original reporting: Stocks stage big comeback in best Thanksgiving week since 2008
Market data as of November 29, 2025. Historical data from S&P Global. Past performance does not indicate future results. This is not financial advice.