There is always talk about the Santa Claus Rally in the financial industry this time of year, and with good reason. Since 1990 the Down Jones industrial average has gained 2% on average in the last month of the year, 81% of the time.   In fact, the last week of the year – between Christmas and New Years – historically seems to be the best week of all; gaining on average 1.7% since 1896.

The reason is unknown, but many believe the year-end rally is due to the January affect; when many investors re-enter the market after selling off stocks late in the year to capture losses for tax purposes.   This re-entry tends to have a positive effect on stock values causing the markets to go up.

The opinion seems to be negative whether we will have a Santa Claus Rally this year. There seems to be more Grinch’s than Elves and expectedly they are talking about China and U.S. trade wars, the weak Canadian dollar and declining oil prices which may very well interfere with any last minute upswing in the TSX.

However, a few Wall Street professionals believe we have scratched the bottom of this sell-off and valuations have improved; interest rates are still relatively low giving us access to cash and therefore maintaining liquidity in the market. Many feel if we buy stocks today we will be in a better position December 2019. But will we get a rally by the end of 2018? It is possible, the markets have had incredible swings over the last couple of weeks, up to 6% in 24hrs. So anything can happen, a bit of good news can go a long way in the equity markets.

Either way, as you run around preparing for Christmas day, there is always hope Santa will leave a little more Green for the markets than Red over the next couple of weeks.

I wish you a Wonderful Holiday Season, filled with love, laughter and family,

Merry Christmas!

Tracey

 

 

Sources: CNBC website news feed. MT 21-12-2015

Image courtesy of Feelart at FreeDigitalPhotos.net