Santa Claus rally
There is no generally accepted explanation for the phenomenon. The rally is sometimes attributed to increased investor purchases in anticipation of the January effect, an injection of additional funds into the market, and to additional trades which must, for accounting and tax reasons, be completed by the end of the year. Other reasons for the rally may be fund managers "window dressing" their holdings with stocks that have performed well, and the domination of the market by less prudent retail traders as bigger institutional investors leave for December vacations.
The Santa Claus rally is also known as the "December Effect" and was first recorded by Yale Hirsch in his Stock Traders Almanac in 1972. An average rally of 1.3% has been noted during the last five trading days of December for the NYSE since 1950. December is typically also characterised by highest average returns, and is higher more often than other months.
The failure of the Santa Claus rally to materialise typically portends a poor economic outlook for the coming year; a lack of the rally has often served as harbinger of flat or bearish market trends in the succeeding year.
- "Is A Santa Claus Rally On The Horizon?". finance.yahoo.com. Retrieved 2018-12-17.
- Menton, Jessica (December 17, 2018). "U.S. Stocks Need a Santa Claus Rally to Avoid a Losing Year". The Wall Street Journal.
- Matt Nesto (December 18, 2012). "The Santa Claus Rally: It's Not Make Believe".
- "Global stocks dip as 'Santa Claus rally' elusive, oil rises". Reuters. 2018-12-17. Retrieved 2018-12-17.
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