FYI: Santa may have visited Wall Street over the last week, but that doesn’t guarantee a bull market in 2019.
I’m focusing on the so-called Santa Claus Rally period, which formally begins the day after Christmas and, depending on who you ask, lasts until the end of the year or extends through the first two trading days of January. Defined in either way, Santa has been very good to the market: As of midday on Dec. 31, the Dow Jones Industrial Average DJIA, +1.15% was some 1,500 points higher than where it closed on Christmas Eve.
By the way, defining the Santa Claus Rally period as only starting after Christmas is not an after-the-fact attempt to put lipstick on a pig. While it is true that the Dow performed dismally for the entire month of December — down 9% even after the Santa Claus Rally — researchers for years have consistently defined the rally to only begin the day after Christmas. I made this point mid-December in a column headlined: “Santa Claus is coming to Wall Street—after Christmas.”
Read: Here are the Dow’s and S&P 500’s best-performing stocks for 2018
In any case, there is no evidence that a good Santa Claus Rally leads to a stronger stock market in the subsequent year. Believe it or not, in fact, the stock market on average has performed better following end-of-year periods in which Santa Claus did not visit Wall Street.
Regards,
Ted
https://www.marketwatch.com/story/2018s-stock-market-santa-rally-is-leaving-this-message-for-2019-2018-12-31/print
