With a gain of 5.78% so far in the quarter and just one trading day left in it, the S&P 500 is on pace for a pretty solid Q1.  Given the gains we have seen, it’s ironic that all quarter long investors have been bombarded on a near daily basis with headlines proclaiming an end to the rally.  A 5%+ gain is a 5% gain.  Looking ahead to the final day of the quarter, we wondered how the market tends to close out the quarter following a strong run.  Do investors keep buying or do they take profits?

To shed some light on that question, we looked at every quarter during the current bull market where the S&P 500 was up 5% or more heading into the last trading day to see how the S&P performed on the final day.  Even though we only looked at the current bull market, we found plenty of quarters that met the criteria. During the 32 quarters so far in this bull market, the S&P 500 was up over 5% QTD heading into the last day of the quarter half of the time (16 quarters).  Looking at the results, there’s a pretty convincing case to be made that traders don’t continue piling into the market.  Of the fifteen prior quarters we looked at, the S&P 500 was down on the final trading day of the quarter 12 times for an average decline of 0.39%.  Perhaps it’s due to investors re-balancing out of some of their winning asset classes and into losing asset classes, but during the current bull market at least, there hasn’t been a lot of buying to be found on the last day of a quarter where the S&P 500 was already up 5%.