The so-called ‘Santa rally’ reflects the tendency of US stocks to rally higher around the Christmas holidays. There have been a few explanations for this including general optimism and good spirits around this time of year, but it is one pattern that has been pretty dependable over the last 70+ years. Check out just how strong this pattern tends to be in the last 10 days of December below.

Over the last 71 years, the S&P500 has railed 54 times between Dec 20 and Dec 31. The largest gain has been +7.76% and the largest loss -2.65%. The percentage of winning trades has been 76.06%. The annualized return is 39.86%.

Major Trade Risks: The main risk to this seasonal pattern would be if the Fed takes a faster approach to taper at the next FOMC meeting in December and that causes stocks to sell-off.

HYCM clients can access the Seasonax product in order to analyze over 25,000 currency pairs, indices, commodities, as well as individual stocks.


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