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It’s about that time of year again when traders begin lining up for the annual year-end Santa Claus rally in the U.S. stock market. Will it happen again this year? History may provide some clues.
Looking back over the past century, December is the number one month for positive returns, and November through the first part of January, the brunt of the “holiday period,” has more times than not produced the bulk of the year’s returns.
Don’t ask me why this occurs. I guess that past rallies may be professional traders trying to dress up their client portfolios by buying lots of high-flying stocks before the year’s end to pad their statements. It may be because people are putting their end-of-year bonuses to work or maybe doing some tax planning. Or it just may be that everyone is in a good mood during the holiday season and eager to buy something. Who knows? Whatever the reason, the holidays are usually very good for stocks.
So, are we going to get our Santa Claus rally this year? From looking at the trend, we may be ripe for a rally right into the New Year.
Ho, ho, ho.
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