As we look ahead for the month of December, the question is always, will there be a Santa Rally? Take a look at a spread sheet of the last 18 years, year-end statistics, looking at 4 criteria for each year. Analysis done on a S&P 500 E-Mini Weekly Chart.
- Was the Year-End Close greater than the Pre-Holiday high?
- False 72% or 13 out of 18 years. This suggests end-of-year profit taking.
- Was there a Santa Rally? (Criteria- last week of Dec>week prior to Thanksgiving)
- True 88% or 16 out of 18 years.
- What was the rally or range in points?
- (-84.25 to +110.75)
- Was the second week in January>pre-Thanksgiving?
- True 77% or 14 out of 18 years.
Note while stats confirm what we hear… there is a Santa Rally more often than not; it’s worth noting the quality of the rally. When broken down, 16 out of the last 18 years, the market closed higher (purple rows) but there are actually only 6 out of those 16 years (green rows) when the Santa Rally exceeded 50 points. In 2000, and 2007, there was no rally. The two yellow circles indicate although there was a Santa Rally, it was short lived, however the majority of the time, the rally continued into the month of January.
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