Everything you need to know about Santa Claus Rally
What is the Santa Claus Rally?
Santa Claus rally is a calendar effect that includes the last five trading days of December and the first two-day date of January. During this time, there was a rise in the stock price in the market. According to some reports, the stock prices increase around 1.3% during this time, which is a great number.
In these seven trading days, stock prices are higher in the year. There is a 76% rise in the stock on these trading days. So we can say the Santa Claus rally is a surge in the stock market between Christmas and the new year.
Santa Claus rally brings happiness to wall street, and people are encouraged to invest their holiday bonuses in the stock market.
Some key Points About the Santa Claus Rally
- Santa Claus rally shows the stock market’s tendency at the end of the year and beginning of the year.
- There are many theories about why Santa Claus exists. The reason behind it is increased investment in the holiday season.
- Although it is running smoothly every year, there is no guaranty that it will continue in the future.
- Santa Claus rally is bringing good results to shareholders.
Where Did You Hear About the Santa Claus Rally?
You must be heard about the Santa Claus rally on finance-related news. Or your legal advisor uses this word. You can also hear about the Santa Claus rally to the people who invest in the share market.
How Does the Santa Claus Rally Work?
There are many theories behind how the Santa Claus rally works. The stock market share price rise between December 25th and January 1st. However, there is no proper explanation for this situation.
It may be because of holiday bonuses and business demand in the last days of the year. There are mixed reviews about the Santa Claus rally.
The Special Fact About the Santa Clause Rally
- People like to invest their Christmas bonuses in this Santa Claus rally.
- The festival brings a rise in the price of stocks, so investors feel happy.
- Tax considerations, some trades are motive to complete at the end of the year.
- Its noticed for the first time in the year 1972.
- Some people still do not believe that any Santa Claus rally can increase their money.
- Still, people don’t know why the Santa Claus rally happen.
Does the Holiday Affect the Santa Claus Rally?
History shows that holidays big time affect the stock market. There is no way to know why holidays affect the share market so much, but they have a huge impact on the share market. It depends on the opinion that is Santa Claus rally effect by holidays.
One theory about this is that all the influenced investors take holidays this time. That’s why only retail investors are left in the market. Some trend shows that the stock market performs well during the end of and new year. Many analytic believe that holidays affect Santa Claus rallies.
What Causes the Santa Claus Rally?
There is no explanation about this phenomenon, but here is some reason that causes Santa Claus’s rally.
- Short sellers take holidays during holidays.
- There is slowly tax-loss investing at the beginning of December.
- Holidays make it easier to higher the market.
- Because of the January effect, increase in investor purchases.
Pros and Cons of Santa Claus Rally
Experienced investors like to invest in holidays. According to them, it is the most profitable time to invest. You can use many strategies while making short-term trades like stop orders, stop-loss orders, and other trading methods to minimize risk.
But for inexperienced investors, it can be very risky because of the volatile conditions created by the Santa Claus rally.
Is Santa Claus Rally Teal?
The term Santa Claus rally was first noticed by stock market analytic in early 1970. They see a certain change in the stock market during the end-year holidays. However, the past can never decide the future.
Since 1950, the S&P 500 has gained around 1.3% during the Santa Claus rally. Santa clause earned profit 18 times out of 27. It’s about two-thirds.
Is the Santa Claus Rally Happening This Year?
The Santa Claus rally happens from December 25th to January 2nd. But we can’t say how much higher the market goes. How much return you will get in the Santa Claus rally.
Conclusion
We talk about the Santa Claus rally here. How it does affect the share market and how its works, we discuss it all. It is a good time for the share market because the shares rate increases. The holiday season is the reason for the Santa Claus rally.