Souce: The Big Picture, Historical Average of Christmas Rally, Santa Claus Rally and Average
No Santa Claus Rally in December?
The Santa Claus Rally refers to a seasonal stock market trend that typically occurs during the last five business days in December and first two days of January. During this period, the market is often observed to yield positive returns, an average of 1.30%, leading to its naming. This trend has been observed a total of 58 times since 1950, an astonishing 80% probability. There are multiple theories as to why this happens – but in short, there is no clear specific reason. One theory is that many employees receive Christmas bonuses, another is that we are simply in a better mood in December itself. Yet another plausible reason is related to tax-loss harvesting strategies.
Why is a Santa Claus Rally significant?
Based on data from the 2019 Stock Trader’s...