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Santa’s Rallying Cry

19/12/2016

4 Comments

 
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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:
  • Days 1 to 3 - the 3 Days before Xmas Day.
  • Days 4 to 6 - the 3 Days between Xmas Day and New Year’s Day.
  • Days 7 to 9 - the 3 Days after New Year’s Day.

The FTSE100 Returns for these Days since 1984 are as follows:
  • Day 1 - 59% of years positive, Average Daily Return 0.16%.
  • Day 2 - 69% of years positive, Average Daily Return 0.40%.
  • Day 3 - 79% of years positive, Average Daily Return 0.25%.
  • Day 4 - 83% of years positive, Average Daily Return 0.47%.
  • Day 5 - 62% of years positive, Average Daily Return 0.17%.
  • Day 6 - 56% of years positive, Average Daily Return 0.10%.
  • Day 7 - 55% of years positive, Average Daily Return 0.33%.
  • Day 8 - 62% of years positive, Average Daily Return 0.10%.
  • Day 9 - 45% of years positive, Average Daily Return 0.08%.

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.

Reply
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.......
cheers WD

Reply
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.....

What happened last year:>>

1 Dec 22, 2015 6034.84 6083.1 48.26 0.80%
2 Dec 23, 2015 6083.1 6240.98 157.88 2.60%
3 Dec 24, 2015 6240.98 6254.64 13.66 0.22%
4 Dec 29, 2015 6254.64 6314.57 59.93 0.96%
5 Dec 30, 2015 6314.57 6274.05 -40.52 -0.64%
6 Dec 31, 2015 6274.05 6242.32 -31.73 -0.51%
7 Jan 4, 2016 6242.32 6093.43 -148.89 -2.39%
8 Jan 5, 2016 6093.43 6137.24 43.81 0.72%
9 Jan 6, 2016 6137.24 6073.38 -63.86 -1.04%

Reply
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.
Anyway, what will be will be - have a great Xmas and NY break !!
thanks P

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