The back half of December should be strong for US equities. Note the emphasis.

A lot of things that “should” be the case don’t ultimately pan out. Ask anyone who just knew I was going to be a high-powered politician or a high-profile defense attorney one day. (The world’s probably a better place for my “failure” on both counts.)

And past performance is no guarantee of future of results. Ask the disclaimer below every chart and analyst communication.

But if history’s any guide, the odds favor a strong close to the year for the S&P and big-cap US tech, as illustrated by the simple charts below from Citadel’s Scott Rubner.

“The second half of December has one of the best hit rates of any two-week period of the year,” Rubner wrote, in his latest, noting that the benchmark traded higher 75% of the time historically, with an average return of +1.3%.

Of course, volumes tend to be muted around the high holidays and that can amplify the impact of large flows. In late 2018, for example, post-Christmas rebalancing flows helped mitigate that December’s grievous stock losses. That cuts both ways. In the event some left-field catalyst precipitates a selloff and a vol expansion, associated mechanical flows could have a larger impact on prices if market depth’s impaired.

The corporate bid’s in play. So that’s helpful. With Q3 reporting season now over, the buyback window’s fully open and you’ll recall that authorizations are on track for a record this year near $1.3 trillion.

Citadel reckons daily VWAP demand from corporates at $5.3 billion into year-end.

The bottom line from Rubner is that all else equal, stocks should grind higher into the close of the year amid relatively light positioning and a favorable seasonal.

FOMO, he wrote, can “pull under-allocated investors back in” and with volatility waning anew following the expansion seen post-Nvidia earnings, systematics can dial up exposure mechanically assuming no new shocks.

Put volumes, Rubner went on, have now abated and are just ~40%ile. On November 20, the day December rate cut odds and the S&P each neared a local bottom, put volumes were 99%ile on a five-year lookback. That same week, “AI bubble” mentions using Bloomberg’s story count function peaked.