Black Friday sales reports showed a considerable gain over the weekend. Naturally investors are hoping that Santa Claus will make for a very Merry Christmas and Happy New Year with a big end of year rally. So before you start listening to all the news stories that will come out around this time, let’s see if there is any truth behind it.
The failure of a Santa Claus rally though might just appear to precede a new bear market.
Here Are The Facts…
Since we try to keep the trading psychology to a minimum when dealing with seasonal trends, I want only stick to the facts and historical figures. If we go back 20 years, the S&P 500 and the Dow on average gained 1.79% and 1.69%, respectively during the month of December. Moreover, the S&P 500 has posted negative performance during the month only 4 times during the last 20 years; 6 times for the Dow.
Overall, December ranks as the 3rd BEST performing month for the stock market behind June and July. Regardless of how the market preforms as we head into December this week, I don’t think it will be enough to create anything more than a flat year for stocks. As of the close last week, stocks were down 0.47% on the year.
Do You Believe In Santa Claus?
You may not believe in Santa Claus (sorry if I’ve spoiled the hoax) but what about a Santa Claus rally? Are you more bullish or bearish heading into the month of December after a seemingly very good Black Friday sales report?
Watch The 1st Video In This Free 4-Part Series On Options Trading
I've been told by tons of people that you've got to either have a lot of money or a really killer system to trade options and win. Some new indicator or signal that will transform your portfolio.
Honestly, there is no "magic secret" to trading options. It simply comes down to an understanding of risk management, option pricing and strategy selection.
Instead of learning these lessons the hard way (i.e. losing your shirt in the market), why not take my free 4-part video course as I cover each area in detail. Plus, I'll go over the exact checklist I use for selecting trades each month!