'Interestingly there is no agreement about when the Santa rally really starts, with sources offering conflicting answers; is it the whole of December, the week running up to Christmas, or any time period outside this? At IG, we decided to perform our own analysis, running the numbers over every December time period combination (all 465 of them) over the past 30 years.
odysseus2000 wrote:The timing of the Santa rally varies a little, but usually in my experience it starts after Christmas if it comes.
It never came in 2016. A question now is whether the late December selling seen in the US continues into 2017 and if so whether it spreads out to European & Eastern markets
The results are interesting. We found the best time period to invest has been 15-31 December, with an average annual return of 2.53%, and a positive return 87% of the time. Showing that December 15 is not a complete anomaly, 14-31 December (+2.42%) and 16-31 December (+2.50%) were also in the top ten.'https://www.ig.com/uk/trading-opportuni ... ion--35686
I'm not sure if you read what I previously linked, but the above is the core of what I was referring to.
They also note that one of the causes of the Santa Rally is the January Effect. 'Bargain hunting before stock prices rise in January (known as the January effect)'
The overlap between any Santa Rally and January Effect is variable. But I'd expect it to perhaps be magnified if you trade US markets, which of course work to a calendar financial/reporting/tax year.
ps. IMO the late-Dec selling in US markets was profit-taking, combined with off-risking prior to the protracted holiday period. If you net all the opinions re: the outlook for US markets as Jan gets under way it feels bullish to me.