I see the magical words “Santa Rally” bandied around all the time and I thought it might be useful for Readers to summarise the info on this from the 'UK Stockmarket Almanac 2016’ so we get a clearer understanding of what it really means (you can buy the Almanac for 2017 from Wheelie‘s Bookshop but I note it is quite expensive at the moment - I am delaying buying a copy until into 2017 when the price usually drops. Once a Value Investor, always a Value Investor…..). I am sure majority opinion thinks of it as a December Rally but this is really not true at all. I had intended to include a bit on this in my Blog from last night regarding the Charts but by the time I had watched the Apprentice Final I had pretty much timed out.
The Santa Rally is really just 9 Days around Xmas Day and New Year’s Day. The Almanac breaks it into 3 periods:
The FTSE100 Returns for these Days since 1984 are as follows:
Note the 4th Day is strongest with the best Returns in the first 4 Days. However, according to the Almanac, the 4th Day is extremely volatile historically. Day 9 is the weakest Day of the Xmas / New Year period. The first Day of the New Year tends to be good. Note that overall the Returns for the 9 Days are best at the start but then tend to tail off. Short and sweet, Cheers, WD.
4 Comments
Ed
20/12/2016 10:52:08 am
This has been such a weird year that it will be interesting to see what happens over the next couple of weeks. I think one of the main factors behind the December rally is a sort of insane confidence in the future fuelled by too much food and drink. There should be some sort of December wealth warning - or at least a Sanity Clause.
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WheelieDealer
22/12/2016 10:41:16 pm
Hi Ed, you are most definitely on fine form - love the 'Sanity Clause' for Santa Claus rally.......
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catflap
20/12/2016 02:39:16 pm
Santa had a bit of a post christmas hangover last year. Concurs with what the Almanac says. Id be keen to book any early gains and be cautious after day 4.....
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WheelieDealer
22/12/2016 10:45:55 pm
Hi catflap - thanks for your list - that is really eye opening. As you say it lines up with the Almanac view that the earlier days are the strongest and then it tails off. We have had 2 days so far and it has been pretty soggy (I am typing this on Thursday night). Of course the strange factor this year is Pound weakness - it was certainly the case today that the Pound fell and the FTSE100 was up but most other Major Indexes were down. US Markets look super toppy to me and a sell-off in january must be quite possible.
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