Santa’s Rallying Cry

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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.