Defining the Santa Claus Rally and Discussing If it’s Real and a Marker to Watch
December 20, 2022
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this week. My name is Jake Sanders, and I am a partner at Wealth E&P and operate as a Wealth Advisor and Certified Financial Planner.
As we head into the end of the year, a lot of you have been asking us about what can we expect from markets. Some of you may have also heard of the phrase “Santa Claus Rally”. Technically speaking, the “Santa Claus Rally” is the week following Christmas and the first two trading days of the new year. It's generally characterized by pretty low trading volume (as a lot of institutional traders are at home with their families) and a lack of economic news to trade on as well. As the name also implies, it means that the market is generally going up and not down.
Now, this begs the question: is the “Santa Claus Rally” real? Evidence would suggest that, at least in part, it is real. In fact, the Stock Traders Almanac would tell us that since 1950, the return on average on the S&P 500 during this trading period is 1.3% going through 2019. Now others might cherry-pick data and suggest that whether or not we see a “Santa Claus Rally” is going to predict “Doom and Gloom” for the coming market year or we're going to have a great market year. Here at Wealth E&P, we rely on our indicators, our process, and our All-Weather score to tell us that regardless of whether we see a “Santa Claus Rally” this year.
We wish you and your family a very Merry Christmas and a Happy New Year on behalf of our whole team. We appreciate you and we look forward to seeing you next year! If you’d like to chat about any of these topics, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our next Market Minute! We hope you have a great rest of the week!
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