This Year's Santa Claus Rally

JC Parets
December 13, 2022

It's that time of the year again.

The infamous Santa Claus rally is just around the corner.

And contrary to popular belief, it doesn't start until the end of next week.

The official period for the Santa Claus rally includes the last 5 trading days of the year and the first two of the following year.

Based on the 2022/2023 holiday schedule, that means this year's Santa Claus Rally begins on Friday December 23th and goes through Wednesday January 4th.

These 7 days have historically had a ridiculous track record, averaging over a 1.3% return for the S&P500 and coming in positive almost 80% of the time.

Since 1950, all other 7-day periods throughout the year only average 0.24% returns and were positive less than 60% of the time.

That's real alpha.

But for me, it's less about the returns during this time of the year, even through they are very impressive, and more about the implications of Santa not showing up.

As the saying goes,

"If Santa Claus Should Fail To Call,

Bears May Come To Broad and Wall"

For those of you not familiar with lower Manhattan, the corner of Broad St. and Wall St. is where you'll find the New York Stock Exchange.

So in other words, if there is no Santa Claus Rally, and stocks don't go up during that period, it normally precedes gloomy days ahead for stocks: Recessions, Bear Markets, all that stuff.

I don't want to steal Jeff Hirsch's thunder, so I encourage you to go check out the annual Stock Trader's Almanac for all the details and stats on the SCR indicator.

I was flipping through last year's Almanac this morning to find some of my notes.

See?

I'm old school:

For me, Seasonality isn't everything.

But it does really help put trends into context.

Us humans tend to behave in certain ways during different times of the year. We dress differently, we go to different places, we hang out with different people.

If you think that doesn't impact our decision making in the markets, then I don't think you've been around the markets long enough.

When we change our normal behavior patterns, something is up.

And the implications of a Santa No-Show are a great example.

In the meantime, there are shorter-term moves in the markets this month that don't have anything to do with Santa Claus, or even a rally.

Ever since Kimmy Sokoloff joined our team a couple of months ago, she has been absolutely crushing it.

I've never seen anything like it.

So I'm even day-trading now myself. And since 90% of her trade alerts are in the first 90 minutes of trading (9:30AM ET - 11AM ET), I can be in the room with her and the rest of the traders on most days. It's not intrusive to my day-to-day work activities at all, plus I get to make some money!

It's pretty great.

Click here to join us every morning.

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