It’s that time of year again – you’ve probably heard a slew of catchy Wall Street sayings like, “Remember to Buy in November,” “the January Effect,” etc. And, of course, “The Santa Claus Rally.” This one’s been around forever and hopefully it comes through for us as we close out 2020 and head into 2021. I think we’ll all be glad to see 2020 in the rearview mirror for many reasons!
The Santa Claus Rally (SCR) isn’t just a December thing. It’s actually the last 5 trading days of the year and the first 2 of the following year. This 7 day period has returned an average of 1.3% for the S&P 500 since 1969, and a 1.7% average gain since 1928. Not too shabby. This year the rally clock starts on Christmas Eve and doesn’t end until Tuesday, January 5th. Because of weekends and holidays, this year’s SCR will last longer than others.
Although it would be great to rally into the new year, I think Santa Claus may have come early. And we needed it! Considering what we’ve been through, it’s astonishing to see where we are in terms of the market and economy.
I’d say we’ve been rallying since the market bottomed in March! All Santa can do at this point is put icing on the cake (or cookies)!
Merry Christmas and Happy Holidays!