It’s Time for the Santa Claus Rally
It can be counted on like “A Christmas Story” being played every hour on the hour starting on Christmas Eve. Each year, following Christmas and before New Year, investors deal with the phenomenon known as the Santa Claus Rally. There are a lot of reasons that it exists. Whether it be the Christmas bonuses being cashed, Christmas money being used or just general optimism that things will get better, people seem to really move in a positive direction following the post-Christmas season. For one week, all the negative forces go away, and it seems like optimism rules the roost.
It does make sense that there should be optimism. After all, the Christmas season is when retail stores make their largest gains on the year. Consider Black Friday. Throughout tie, the term has taken on a variety of meanings. To the retail industry, it has signified historically the point in the year where profits when from red to black, and the stores began to see positive income. This hasn’t changed, and nothing indicates that it would change moving forward.
Holiday economics can be a fun thing after all. There is still quite a bit that remains to be seen though. Day one of the Santa Claus rally in 2015 saw the market fall 23 points. Does this signify that there will be no rally on the year? I think that it is too early to tell. Perhaps the do-gooders of the market were not out in full force today, or potentially still a bit full from the holiday’s offerings.
What one would have to believe is that there should still be some type of overall rally in the market before the New Year rings their bells. It is tough to discern at this time how much of a rally there will be, but there should be one. For stockholders looking for that last little gain before selling their stock in the new year, Santa is likely to give the same level of happiness he did when you got what you wanted under your tree as a child.