U.S. stocks are closing 2020 on a strong note, and many investors are betting the party will continue after a tumultuous year that marked both the end of the longest bull market and the shortest-lived bear market ever.
The options market is pricing in more volatility in January than December, likely due to the Georgia elections. If Republicans win at least one Senate seat, they will maintain a slim majority. If Democrats sweep the dual runoffs, the chamber would be split 50-50 and the tiebreaking vote would go to Vice President-elect Kamala Harris, giving President-elect Joe Biden's party full sway over Congress.
In prior bull markets, when the S&P 500 takes out its previous bull market high, the index has experienced a median gain of 38per cent over the span of 26 months before topping out, according Bespoke Investment Group data. For much of this year increased market concentration has been a nagging worry for investors, with top five S&P 500 constituents generating 127per cent of the index’s return during the first nine months of the year, according to BlackRock's calculations.