The so-called ‘Santa rally’ reflects the tendency of US stocks to rally higher around the Christmas holidays. There have been a few explanations for this including general optimism and good spirits around this time of year, but it is one pattern that has been pretty dependable over the last 70+ years. Check out just how strong this pattern tends to be in the last 10 days of December below.

Over the last 71 years, the S&P500 has railed 54 times between Dec 20 and Dec 31. The largest gain has been +7.76% and the largest loss -2.65%. The percentage of winning trades has been 76.06%. The annualised return is 39.86%.

Major Trade Risks: The main risk to this seasonal pattern would be if the Fed takes a faster approach to tapering at the next FOMC meeting in December and that causes stocks to sell off.

HYCM clients can trade the S&P500 and use Seasonax to analyse its seasonal patterns, as well as over 25,000 other indices, currency pairs, commodities, and stocks. Simply contact your account manager to start your free Seasonax trial right away.