‘Santa Claus Rally’ Will Drive Stocks Higher into the New Year

‘Santa Claus Rally’ Will Drive Stocks Higher into the New Year

#SantaClaus #Rally #stocks

$DJIA $SPY $QQQ $RUTX $VXX

The Santa Claus Rally phenom was discovered in 1972 by Yale Hirsch, creator of the Stock Trader’s Almanac.

  • A 7-day trading frame known as the “Santa Claus Rally” took hold of Wall Street Thursday and could drive the stock market higher into year-end.
  • Based on historical data, the stock market has returned an average 1.3% and is positive 78% of the time during the 7-day frame that begins on Christmas Eve and ends in early January.
  • A Santa Claus rally happening will serve as a sign that further market strength is in store for the start of the New Year.
  • When Santa calls the Bears avoid Broad and Wall, the Stock Trader’s Almanac tell us.
  • The Bears called at Broad and Wall each of the last 3 years of the Hussein Obama Administration
  • The Bulls have called at Broad and Wall each years since Y 2016, ‘The Trump Era’.
  • The beginning of this Santa Claus Rally signals that investors and traders see President Trump winning his 2nd term.

According to historical data dating back to Y 1950, the S&P 500 has posted an average return of 1.3% and is positive 78% of the time during the last 5 trading days of December and the 1st 2 trading days of January.

The frame marks the strongest 7-day period in which stocks are reliably higher, and aids December in being the best performing month of the year for the stock market.

Whether it is optimism about a coming New Year, holiday spending, traders on vacation, institutions squaring their books before the holidays or the Christmas Spirit, the bottom line is that Bulls believe in Santa Claus.

Note:  The low priced stocks with strong momentum under 25/share are showing an usually high results.  This is mostly due to the recent high speculation among Special Acquisition Companies or SPACs. As with most of these, pay attention to the old adage, “the trend is your friend, until it ends.

Over the past 20 yrs, the 5Xs stocks posted negative returns during the Santa Claus frame (3 of them during Hussein Obama 2nd term), the month of January was lower for stocks each time.

Thursday, the benchmark US stock market indexes finished at: DJIA +70.04 at 30199.81, NAS Comp +33.62 at 12804.74, S&P 500+13.05 at 3703.06

Volume: Trade on the NYSE came in at 381-M/shares exchanged.

The CBOE Volatility Index (VIX) is down 6.0% to 21.92. 

HeffX-LTN’s overall technical outlook for the major US stock market indexes in Bullish with a Very Bullish at the wk ended 24 December 2020.

  • NAS Comp +42.7% YTD
  • Russell 2000 +20.1% YTD
  • S&P 500 +14.6% YTD
  • DJIA +5.8% YTD

Looking Ahead: Investors will receive no economic data Monday.

The US financial markets are closed Friday, in observance of Christmas.

Have a Healthy, Happy, Merry Christmas, Keep the Faith!

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Paul Ebeling

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.