Is it this simple? Probably not, but it is interesting.
When the Santa Claus Rally takes place, the year is up 10.5% on avg and higher 73.2%.
When there is no SCR? Only 5.0% and 67%.
“If Santa should fail to call, bears may come to Broad and Wall.” —Yale Hirsh @AlmanacTrader pic.twitter.com/kHEWSW2UZb
— Ryan Detrick, CMT (@RyanDetrick) December 21, 2022
Today’s Chart of the Day was shared by Ryan Detrick (@RyanDetrick). With the S&P 500 down -6.3% in December, it’s getting harder to believe in Santa Claus this year. However, the real Santa Claus Rally period doesn’t officially begin until tomorrow (Friday, December 23rd). This phenomenon, created by Yale Hirsch, refers to the last five trading days in December, and the first two trading days in the new year. Since 1950, the S&P 500 has closed higher over this seven-day stretch 79.2% of the time for an average gain of +1.33%. Many expect this rally as a sure thing and then dismiss it when it fails. However, they’re missing the real signal. When the Santa Claus Rally fails, it has often signaled below-average returns the following year. Either way, there will be valuable information to be gleaned from how the S&P 500 performs over the next seven trading days. For more on this topic, check out this note from Ryan.