The Euro Stoxx has had a great rally over the last 30 years between December 14 and January 01. To be precise there have been 27 years of gains with only 6 years of losses. The greatest loss was in 1990 with a -5.6% drop, and on the other hand, the largest gain was in 1998 with a whopping +16.35% profit.

So, based on the balance of probabilities we would favour more upside again this year during this time.

The factors in favour are:

• Global optimism on vaccine hopes
• Return to growth expected next year
• Plenty of European stimulus with the ECB set to expand PEPP

The factors against further growth are:

• Any rising COVID-19 cases
• A slowdown in European growth

However, one key irony to be aware of here is that if the situation for Europe gets worse, then the upside for Euro Stoxx looks even better. Why? It just means more stimulus. This would be a case of ‘bad news’ being ‘good news’ for stocks. The Santa Claus rally is a really well-known pattern in the markets, so, this could be a great time to buy Euro Stoxx 50.