Does History Support The Santa Claus Stock Market Rally?

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.┬áSo 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.┬áRegardless 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?