Well, it’s official…
Santa has come to town – and he couldn’t come at a better time.
Obviously, I’m not talking about the jolly ol’ fat guy that brings presents to good little children all around the world – though, a little Christmas cheer wouldn’t hurt as Omicron makes itself known to the world…
But no, I’m talking about the “Santa Rally” that happens over the last 7 trading days of the year – a tradition of sorts for Wall Street – and when it happens, it tends to breed good things for the start of the new year.
2021’s Santa Rally was rip-roaring…
As the markets were up almost across the board.
However, how can we tell if this is a good thing going forward?
With everything going on in our economy – is the Santa Rally good – or bad?
If you want to know – keep reading!
Before we get started, I wanted to ask a quick question…
Does anybody else find themselves hating the last week of the year like I do?
The last week of the year just seems like a waste to me…
It just seems that during that week, people are really just waiting for the next week and new year to begin before really get back to the business of doing business.
Of course, that’s just how I feel. I may be the only one…but I don’t think I am.
However, there are some very good things about the last week of December – and it’s good to remind ourselves of it.
The best thing about it for me, is the continuation of the annual “Santa Rally” that arrives on Wall Street every year…
It’s a rally in which the markets trend upwards and people start dumping their losers and stocking up (no pun intended) on some winners.
Now, unlike Jolly Saint Nick himself, the Santa Rally isn’t guaranteed every year, but it happens more often than not – and fortunately for our struggling economy, 2021’s rally saw Santa arrive with a BANG – as this year’s rally was the best since 2000-01.
20 years ago, we watched the market gain 5.7%, and this year’s Santa Rally put us in the same ball park.
Even better? It lets us know what to expect for the coming year…
However, sticking with the 7-day-rally itself, it’ll probably amaze you to learn that in the eight times since 1929 when the index has gained at least 1% to start that seven-session trading period – it’s produced a gain 100% of the time.
However, not only has it produced a gain each and every time, but it’s done so with an average gain of 3.3%!
Well, last week, on Monday, the S&P 500 closed up BIG thanks to Father Christmas, as the index was up around 1.4% in the session that technically marked the start of the Santa Rally.
And when those gains hold up, data shows that the stock market tends to perform well.
Those good feelings from last week helped lift more than just the S&P, too. It’s also helped lift the Dow Jones Industrial Average and the Nasdaq as well!
Not to mention, Bitcoin got a bit of a boost over the first weekend of the rally too…though that gain has since been wiped out.
That said…what will January look like?
Well, historical data shows that when the Santa Rally comes to town in December, stocks tend to end January HIGHER, with an average gain of 2.94% and average rise of 3.7%, especially when the S&P has started the Santa Claus rally period with an advance of at least 1%.
That’s exactly what happened this week.
All these factors are in play, and it looks like we’re going to have a GREAT January.
Of course, that all depends on Jerome Powell and the Federal Reserve and what they plan on doing.
They’ve talked about tapering and hiking rates a LOT lately, so, if they start these measures in January, you can bet dollars to donuts that this month won’t be as fruitful as it could have been without their interference.
However, they’re going to have to do something soon to keep inflation in check.
The question is: when will they take the first steps to do that?
Hopefully they’ll wait till after January to start…
Because if they do, we’re golden!
If you want to stay golden throughout 2022 – then I would suggest becoming a subscriber of GorillaTrades…
Our stock recommendations operate on fact and data – not rumor and conjecture – making our picks some of the most solid on the market!
We’d love to have you on board for the next round – but understand there are some people who would rather do their own heavy lifting…
Regardless of what you pick – just know we’re here when you need us and we’re ready to help!
Hope you made some $$$ during the Santa Rally – it was a good one and I can’t wait for the rest of 2022!
“Fire is the test of gold; adversity, of strong men.” – Martha Graham