Santa Claus Santa Claus, also known as Father Christmas, Saint Nicholas, Saint Nick, Kris Kringle, or simply Santa, is a legendary figure originating in Western Christian culture who is said to bring children gifts during the late evening and overnigh ...

rally is a calendar effect that involves a rise in

stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a compan ...

prices during the last 5 trading days in December and the first 2 trading days in the following January., According to the 2019 ''Stock Trader's Almanac'', the stock market has risen 1.3% on average during the 7 trading days in question since both 1950 and 1969. Over the 7 trading days in question, stock prices have historically risen 76% of the time, which is far more than the average performance over a 7-day period. However, in the weeks prior to

Christmas Christmas is an annual festival commemorating the birth of Jesus Christ, observed primarily on December 25 as a religious and cultural celebration among billions of people around the world. A feast central to the Christian liturgical year ...

, stock prices have not gone up more than at other times of the year. The Santa Claus rally was first recorded by Yale Hirsch in his ''Stock Trader's Almanac'' in 1972. The

Dow Jones Industrial Average The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity inde ...

has performed better in years following holiday seasons in which the Santa Claus rally does not materialize.

Causes

There is no generally accepted explanation for the phenomenon. The rally is sometimes attributed to the following: * Increased investor purchases in anticipation of the

January effect The January effect is a hypothesis that there is a seasonal anomaly in the financial market where securities' prices increase in the month of January more than in any other month. This calendar effect would create an opportunity for investors to ...

* Lighter

volume Volume is a measure of occupied three-dimensional space. It is often quantified numerically using SI derived units (such as the cubic metre and litre) or by various imperial or US customary units (such as the gallon, quart, cubic inch). ...

due to holiday vacations makes it easier to move the market higher * A slow down in tax-loss harvesting that depresses prices at the beginning of December * Short sellers / pessimistic investors tend to take vacations around the holidays

References

{{DEFAULTSORT:Santa Claus Rally Stock market Calendar effect Behavioral finance