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December’s first trading day has been bearish for S&P
500 and Russell 1000 over the last 21 years. A modest rally through the fifth
or sixth trading day also has fizzled going into mid-month. It is around this
point that holiday cheer tends to kick in and propel the indexes higher with a
pause near month-end.
Small caps tend to start to outperform larger caps near the
middle of the month (early January Effect, 2023 Almanac pages 112 &114). The
January Effect is not to be confused with the January Barometer (2023 Almanac page
18), which states as the S&P 500 goes in January, so goes the year.
The “Santa Claus Rally” begins on the open on December 23
and lasts until the second trading day of 2023. Average S&P 500 gains over
this seven trading-day range since 1969 are a respectable 1.3%. The “Santa
Claus Rally,” (2023 STA p 118) was invented and named by Yale Hirsch in 1972 in
the Almanac.
This is our first indicator for the market in the New Year. Years
when the Santa Claus Rally (SCR) has failed to materialize are often flat or
down. As Yale Hirsch’s now famous line states, “If Santa Claus should fail
to call, bears may come to Broad and Wall.”
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Image and article originally from jeffhirsch.tumblr.com. Read the original article here.