Will we still have a Santa Claus Rally this year?

** Please note that this is NOT to be regarded as an advice or a recommendation, it is meant for EDUCATIONAL AND INFORMATION PURPOSES only and it does not constitute an investment advice, an offer or solicitation to purchase or sell the investment asset classes mentioned.

U.S. stock indexes plunged again last night (4/12/2018), in fact there have been 3 days in the past 2 months in which S&P 500 fell more than 3%! This is RARE, especially with the S&P so close to an all-time high because most big -3% days occurred after the stock market has already crashed 30%-40%.


Let's take a look what happened next to S&P 500 when it falls more than -3% on at least 2 days in the past 2 months, while within 10% of a 2 year high. We can see that S&P 500 did well 2-6 months later, after which forward returns start to deteriorate, especially 1.5 years later.


"Santas Claus Rally" is defined as the usual short, sweet, respectable rally Santa brings to Wall Street within the last 5 trading days of the year and the first 2 in January. Let's take a look at every single -3% decline in a December from 1927 till now and how the stock market fared next 1 week to 2 years later. Interestingly, S&P 500 was up 90% of the time 1 month later. So PERHAPS, we MAY just see Santa Claus Rally again this year IF history were to repeat itself.

Timing is Everything! 时机就是一切!

** Please note that this is NOT to be regarded as an advice or a recommendation, it is meant for EDUCATIONAL AND INFORMATION PURPOSES only and it does not constitute an investment advice, an offer or solicitation to purchase or sell the investment asset classes mentioned.

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