VOO - Santa Claus Rally Time: The Odds Of Holiday Market Cheer In 2023 | Benzinga
Heading into 2023's final week of trading, traders and investors are likely excited about an official Santa Claus Rally.
That's particularly the case this year, which saw the S&P 500 Index rally a whopping 23% since 2022 ended - a positive change from the 27.54% the stock market fell in 2022.
So, what exactly is a Santa Claus Rally, and how likely is it to occur?
What Is A Santa Claus Rally
The phenomenon, given its label by analyst and creator of the Stock Trader’s Almanac Yale Hirsch, generally takes place during the last week of December into the first few days of January. In some years, the rally has taken place over an extended period, beginning Dec. 14 and lasting over two weeks.
Historically, during a Santa Claus Rally, the S&P 500 has risen an average of 1.3%, but it doesn’t happen every year so it isn’t 100% predictable.
Past Santa Rallies
- Between Dec. 20, 2021, and Jan. 4, 2022, a Santa Claus rally caused the S&P 500 to surge 4.98%.
- The year prior, between Dec. 1, 2020 and Jan. 4, 2021, the ETF spiked 2.43%.
- Between 1960 and 2020, Santa Claus rallies happened about 66.66% of the time
- Since 1993, the occurrence took place 67% of the time, per Stock Trader's Almanac.
What’s interesting, is that during bear markets and economic downturns, the rally can be stronger.
Bear and Bull Markets
A bear market is generally recognized when the S&P 500 declines more than 20% from the high ...