Santa Rally

As we move further away from the election and closer to the new year the market continues to chug forward. Whether this is related to the holiday season or the outcome of the presidential election remains to be seen, but the market is setting all-time highs as the Dow approaches 20,000 (expect a Weekend Word touching on this subject in early January).

Historically this late year rally has been commonly referred to as the “Santa Claus Rally”.  Generally speaking, a Santa Claus Rally is a positive market movement between Christmas and New Year’s but, lately it’s been expanded to start right after Thanksgiving. As per Investopedia, since 1990 the month of December has seen average returns of roughly 2% with positive returns 81% of the time and over the last 100 years has seen positive returns almost 75% of the time. 

The driving force behind the rally can likely be contributed to a few things.  October saw the lowest unemployment levels since 2008, hourly wages increased 2.8% over 2015 and gas prices continue to remain low.  This combination has seemingly freed up some money for people to spend on the holidays and considering online sales set records on Thanksgiving and Black Friday, this could easily be the reasoning behind the rally. 

Either way we hope this keeps up as it’s contributing to a happy holiday season.