Home Stocks Dow Jones Commentary: Paul Ebeling on Wall Street, Santa Claus Vs Fake Black Swans

Commentary: Paul Ebeling on Wall Street, Santa Claus Vs Fake Black Swans


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Omicron concerns cooling off, Santa Claus making his list and checking it 2X“– Paul Ebeling

The start of the new wk will not be dictated by corporate news but dictated by Omicron (the fake Black Swan) news. That news is that the Omicron variant does not appear to be vary virulent.

While the mass vaccination campaign appears to be driving the rapid mutation of the virus, governments around the world continue to 2X down on the failed strategy.

Now for the Santa Claus Rally

A Santa Claus rally describes a sustained increase in the stock market that occurs in the last wks of December through the 1st wk of trading days in January. 

There are lots explanations for the causes of a Santa Claus rally including tax considerations, a general feeling of optimism and happiness on Wall Street, and the investing of holiday bonuses.

Another theory is that some very large institutional investors, a number of which are more sophisticated/pessimistic are on vacation during this time, leaving the market to retail investors, who tend to be more Bullish.

A Santa Claus rally is a seasonal phenomenon, according to The Stock Trader’s Almanac, a longtime provider of analysis of both cyclical and seasonal market tendencies.

According to the 2016 edition of the Almanac, “since Y 1969, the Santa Claus rally has yielded positive returns in 34 of the past 45 Christmas holiday seasons, specifically the last 5 trading days of the yr and the 1st 2 trading days after New Year’s. The average cumulative return over these days is 1.4%, and returns are positive in each of the 7 days of the rally, on average.

Many consider the Santa Claus rally to be a result of people buying stocks in anticipation of the rise in stock prices during the month of January, otherwise known as the January effect. Also, there is some research that points to value stocks outperforming growth stocks in December.

Financial columnists typically opine on the likelihood of a Santa Claus Rally. Some cite economic and technical analysis, and others pure conjecture.

Though historical statistics show that higher market returns happen more often than not during these frames, there is no way to predict if or when that will happen again. My work now says it will occur again this yr. Stay tuned…

Have a prosperous week, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.