Here are all the Dow monthly returns since 1990. Last month was the best return since January 1987. Now before you go out and sell because you see 1987, remember the S&P 500 added another 20% the seven months after the huge gains in early 1987.

It was the best November for the S&P 500 since November 1928

Small caps soared on the likelihood of taxes staying lower due to a divided Congress and vaccine progress, with the Russell 2000 adding more than 18% for the best month ever, topping the previous record from February 2000.

What happens after a big month? Well, history says a 10% monthly gain is quite bullish. In fact, we had a 10% plus rally back in April 2020. Sure enough, returns have been strong this time around as well. “The bottom line is the huge gains in November could actually be the start of something much stronger,” according to Detrick. “Also, this was the second month of 2020 with a 10% gain. The only other year to do that? 1982, which kicked off a historic bull market.”

Turning to December, this month is widely known to be quite bullish, as Santa comes to town, people feel good, and stocks tend to do well. As shown in the LPL Chart of the Day, since 1950, December has been the second best month of the year, with only November better. December had been the best month of the year until the historic 9.2% drop in 2018. As a result, December hasn’t been quite as strong over the past 10 and 20 years.

Breaking it down even more, a big rally in November can potentially steal some of December’s thunder. As after a 5% or 10% rally in November, the returns in December are more muted. The flipside to this though is if the S&P 500 is up more than 10% for the year (like 2020), then stocks have benefited from some performance chasing and have tended to do better.