Have you heard of the Santa Claus Rally? The term “Santa Claus Rally” is nothing new to investors and this is something everyone is hoping for. “Santa Claus Rally” refers to the sustained increase in the stock market usually in the last week of December where Christmas Day falls into and thus this is how this phenomenon gets its name.
According to what I found, there are several theories that support this “Santa Claus Rally”
- Increased holiday shopping during the festive season. There are many ongoing sales and events such as Black Friday sales, 12.12 sale, Christmas sale and End of Year sales. All these shopping events give the retail sector a boost.
- Institutional investors settling their books before going for their vacation. We all know that before REITs announce their financial results, the share price will always go up if investors are expecting some good financial results. Basically, investors sentiments supported the “Santa Claus Rally”.
Let us take a look whether “Santa Claus Rally” will happen this year for Straits Times Index. Below is the chart for SPDR Straits Times Index ETF. As you can see, there is an overall uptrend since early December.
Next, lets look at the Standards and Poor 500 Index. The uptrend is more apparent. As you can see the uptrend starts in early December as well.
Do you believe in the “Santa Claus Rally”? Well, I certainly do hope there will be a nice present from Santa Claus.
Last but not least, I wish everyone lives be filled with love and happiness and may your year be filled with positive energy and good vibes.
Merry Christmas!!