Is a Santa Claus rally in stocks coming or is it already over?
By Dian Vujovich
How about that Santa. He’s everywhere these days from malls to rooftops.Why the guy simply rocks.
But the big question on Wall Street these days is if the fella will deliver a seasonal rally?
Originally, when the Santa Claus rally was first recognized in 1970, it was a two-week event that began the last week of December and run though the first week of the New Year. But just as everything changes, so has the time frame of this event. Now it begins November 1 and extends through January 31. Geez, that’s three whole months. Or, a quarter of the year. Oh well, a lot can change in 40 years. Look in the mirror or read the long-term performance of the markets and see for yourself.
According to InvesTech Research, the average gain in the S&P500 between Nov. 1 and Jan. 31, 1970-2010, has been a positive 4.2 percent. On the Donner and Blitzen side, only 25 percent of the time has Santa’s rally turned out not so hot. But even then the average fall has been less than 3.5 percent.
InvesTech writers suggest that this year’s rally may have already come and gone. That’s because the S&P 500 has gained 4.8 percent since Nov. 1 and the newsletter’s pub date, Dec. 17.
With seven trading days to go until the end of 2010, this year’s Santa rally could be a goodie. Providing, of course, an up tick in stock prices continues on through the end of Jan. 2011.
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