Giles Coghlan LLB, Lth, MA
HYCM
Many stocks tend to gain towards the end of the year in what’s known as a ‘Santa Rally’. Is it optimism surrounding holidays? Window dressing year-end results? A self-fulfilling prophecy as the general mood of buying gifts translates into buying stocks too? Whatever it is, the pattern is notable. Furthermore, if the Fed needs to hike more aggressively then certain stocks can still gain in a high-interest-rate environment, particularly banks that can increase their interest rate charges on loans.
Over the last 10 years, JPMorgan has had a bias for strength. It has gained 8 times and only lost value 2 times with an average return of 2.64% between December 14 and December 31. With the Federal Reserve meeting on December 14 is it worth considering this seasonal pattern as a potential beneficiary of the so-called ‘Santa Rally’?
Major trade risks: The biggest risk here is any specific news here for JPMorgan and the Federal Reserve meeting itself. Also, prior seasonal patterns are not guarantees of future seasonal patterns.
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