'Santa Rally' time period

[glgene]

I read last night that the time period for the so-called 'Santa Rally' period is the last 5 trading days in December + the first 2 trading days in January.

Is this correct?

Gene

[l2ridehd]

I would agree with the last 5 trading days of the year, not sure about the first two of next year. Most stock funds and ETF's are doing everything they can to get their results as high as possible at year end. Starting in January they will adjust their portfolios, sell losers, buy new, and what ever else they have been holding off doing to protect results. But, guess that could create high volume which could be positive over all.

Fosback's seasonality trading system says to stay invested from 12/20 to 1/12. I don't follow his system, but do reference it if planning to buy or sell any way.

Last year I moved to simplify and consolidate all investments and moved 90% into index funds to map to the total global markets. Have had over 50% that way for 5 years, but am now 90% there. Still play with 10% but even put that in those same funds if sitting on the sidelines.

Index funds work extremely well, are very low cost and very simple to manage. Just do an AA re-balance once a year and so far it has out performed everything else. It forces you to buy low and sell high if you stick to your plan.

[glgene]

I would agree with the last 5 trading days of the year, not sure about the first two of next year.

OK..I went to The source (Stocktrader's Almanac) and found this about the so-called 'Santa Rally' period for stock market investors. It does cover the last 5 trading days of the year + the first 2 trading days of the next year.

The 'Santa Rally' isn't perfect (what is?); it doesn't always occur. But from a 41-year study (from 1969 thru 2009), it showed positive returns 75.6% of the time. That is excellent.

Best year was 2008, when the S&P 500 advanced +7.4% during the 7-day period. Worst year was 1999, when it went down -4.0% during those 7 days.

Average return for the 7-day period over the 41 years was +1.6%

During the 41 years of study, the best (overall) day for gains was Day #7. Worst was Day #5. On a yearly basis, some days did show losses. Remember, about 1/4 of the years showed a loss during the 7-day period.

1969 thru 2009 ......... 2010
-----------------------------
Day 1, +0.33% ....... +0.04%
Day 2, +0.30% ....... +0.14%
Day 3, +0.08% ....... +0.07%
Day 4, +0.22% ...... (-0.16%)
Day 5, +0.02% ....... +0.02%
Day 6, +0.16% ....... +1.03%
Day 7, +0.45% ...... (-0.06%)

Total: +1.6% (rounded, per study)
2010: +1.097% (compounded results)

SPY (ETF proxy for SP 500)
So far in 2011
---------------------
Day 1 (12/23) +0.89%

Great start for 2011. 6 days to go. Anything can happen -- pro or con.

Gene

[collie1228]

I read this in "Market Watch" today: "The five trading days before Jan. 1 and the two trading days that follow have generated abnormally high returns for investors, yielding positive returns in 31 of the last 41 holiday seasons, according to PNC Financial Services Group strategist William Stone, who cites the 2012 Stock Trader’s Almanac. "

[glgene]

I read this in "Market Watch" today: "The five trading days before Jan. 1 and the two trading days that follow have generated abnormally high returns for investors, yielding positive returns in 31 of the last 41 holiday seasons, according to PNC Financial Services Group strategist William Stone, who cites the 2012 Stock Trader’s Almanac. "

Collie,
That's what my numbers show above. My source, just like the one you quoted, are the same: Stock Trader's Almanac. Yes, 31 of 41 successful years thru 2009 (plus my own research for 2010). But it's not 100%. No guarantee.
Day #1 for 2011 was Friday, 12/23. Day #2 will be Tuesday, 12/27. So far, so good. Keep your fingers crossed!

Gene

[glgene]

Santa took a nap today, but still decided to contribute a 'bit' to the 7-day stock market Santa Rally. Very narrow gains on expected holiday thin volume today.

Here's is this year's tally (using the ETF -- SPY -- as the proxy for the SP 500). Remember, this rally doesn't always take place. It works about 75% of the time. The SP 500 has gone up an average of 1.6% during this so-called Santa Rally 7-day period. Beats 0.01% in a money market fund.

------------------- SPY
Day 1, 12/23: +0.89%
Day 2, 12/27: +0.08%

[glgene]

Yesterday I reported that Santa took a nap on Day #2 this year and contributed just a dinky 0.08% to the (hopeful) 7-day Santa Rally in 2011.

Well, today (Day #3) Santa fell out of his sleigh! He fractured a 1.31% loss.

That leaves Days #1 thru Day #3 to a slight cumulative loss for the SP 500.

So...4 more days to go. Hopefully, at the end of the 7 days (2nd trading day in Jan.) you'll be singing : "Silver Bells" instead of "Grandma Got Run Over by a Reindeer." Stay tuned.

SP 500 ETF proxy: SPY
-------------------------
Day 1, 12/23..: +0.89%
Day 2, 12/27..: +0.08%
Day 3, 12/28..: (-1.31%)

[glgene]

Today (Wed., Day #3) Santa fell out of his sleigh! He fractured a 1.31% loss on the SP 500.


Thursday, Dec. 29:
"Jingle bells, Shotgun shells, Rabbits all the way..."

Santa had his leg checked from his (stock market) fall yesterday. Turns out his mishap from the sleigh caused only a sprain. Santa walked unassisted today with no limp...in fact, he delivered a Day #4, 1.03% gift (SPY increase) to believers in the 7-day Santa rally period. No guarantees, of course.

SP 500 ETF proxy: SPY
------------------------
Day 1, 12/23..: +0.89%
Day 2, 12/27..: +0.08%
Day 3, 12/28..: (-1.31%)
Day 4, 12/29..: +1.03%
Day 5, 12/30..:
Day 6, Jan. 3..:
Day 7, Jan. 4..:

Gene

[Villages PL]

If December is a good month, because the market is up, then it's a positive indicator for January being good too. And if January is a good month, that's a positive indicator for the entire year.

Does that sound familiar? Anyway, regardless of what happens, I think it's way too soon to think about selling.

[glgene]

If December is a good month, because the market is up, then it's a positive indicator for January being good too. And if January is a good month, that's a positive indicator for the entire year.

Does that sound familiar? Anyway, regardless of what happens, I think it's way too soon to think about selling.

Friday, Dec. 30, 11:20 pm
Villages PL,

Can't disagree with you. Of course, I'll be able to confirm that (or not) on Jan. 31, 2012 the last day to measure the 'January Effect.' Isn't hindsight beautiful? <g>

December could have finished a little better, but buyers cut out early today to begin the weekend celebration. Slight losses today in mixed volume.

It was a roller coaster year for sure. The wind 'coming in east' from Europe didn't help the investment mood in the USA. Year-end China fears of a slowdown didn't help. Other incidents, likewise. Investing isn't easy, so they say. I say it too.

For year 2011:
-------------------
Dow 30 was +5.5%
SP 500 was flat
Nasdaq was (-1.8%)

The above stats are before dividends. SP 500 (SPY proxy) had a 1.89% dividend. Thus, it's a little better than appears.

Santa left us with a cliffhanger today. For the first 5 of the 7 days 'Santa Rally period' we're up a cumulative +0.18% (compounded). The acid test will be the final 2 days -- Jan. 3 and Jan. 4. That's when the big boys and girls (institutional investors) resurface to stake their claim on moving the market -- up or down. Volume will pick up next week.

See next message for 5-day Santa Rally time period stats.

Gene

[glgene]

Santa Rally 7-day period, follow-up continues...

SP 500 ETF proxy: SPY
-----------------------
Day 1, 12/23..: +0.89%
Day 2, 12/27..: +0.08%
Day 3, 12/28..: (-1.31%)
Day 4, 12/29..: +1.03%
Day 5, 12/30..: (-0.49%)
Day 6, Jan. 3..:
Day 7, Jan. 4..:

On a 5-day compounded results, SPY is up a mere 0.18%. Not a big +, but better than a (-). Next 2 days will decide the fate of this year's Santa Rally or Rally-less. As stated in an earlier message, the Santa Rally has averaged a +1.6% gain during the 7-day period (over the years 1969 thru 2009). The Santa Rally has worked 75% of the time. Nothing is perfect.

Stay tuned for the next 2 days to close out the Santa Rally period, and also launch the first 2 days of the 'January Effect' which encompasses the entire month. The saying goes something like...."As goes January, so goes the rest of the year." That, too, doesn't always pan out. Because if it always worked, then it would eventually fail. No crystal ball allowed <g>.

Happy New Year!

Gene

ps: Save a spot for Kathy and me in TV;
We'll become TV frogs in 2013.
We're vacationing there Feb. 5-12, 2012 --
(renting a house in Duval.)

[glgene]

Jan. 3, 2012 ... Today was Day #6 of the Santa Claus Rally period. Just one more more day to go.

SP 500 ETF proxy: SPY
-----------------------
Day 1, 12/23..: +0.89%
Day 2, 12/27..: +0.08%
Day 3, 12/28..: (-1.31%)
Day 4, 12/29..: +1.03%
Day 5, 12/30..: (-0.49%)
Day 6, Jan. 3..: +1.59%
Day 7, Jan. 4..:

Thru Day #6, we're at a cumulative (compounded) return of +1.77%. The full 7-day average return, from 1969 thru 2009, is +1.6%. Returns have been positive about 75% of the time.

Stay tuned for tomorrow's final contribution of the current 7-day period.

Gene

[glgene]

Jan. 4, 2012 ... Today is Day #7 of the Santa Claus Rally period. The covering period is now complete for this year. 3 cheers for Santa!

SP 500 ETF proxy: SPY
------------------------
Day 1, 12/23..: +0.89%
Day 2, 12/27..: +0.08%
Day 3, 12/28..: (-1.31%)
Day 4, 12/29..: +1.03%
Day 5, 12/30..: (-0.49%)
Day 6, Jan. 3..: +1.59%
Day 7, Jan. 4..: +0.16%

Thru Day #7 (final day), we're at a cumulative (compounded) return of +1.94%. The full 7-day average return, from 1969 thru 2009, was +1.6%. From 1950 and on, the return was 1.5% Returns have been positive about 75% of the time. Doesn't work every year.

Here is the final tally this year (rounded to nearest 1-place decimal; last 5 trading days of Dec. + first 2 trading days of Jan).

Dow Jones, +1.6%
SP 500 ---, +1.9%
Nasdaq ---, +1.9%

So...forget the cookies. Santa gets eggnog!

Next tests: (1) First 5 trading days of January, and then (2) all trading days in January. The latter is referred to as the January Barometer (or Effect).

So far, so good. If it ends up a winning trifecta, Santa is going to get tanked on 3 treats of eggnog! Don't know if he can handle that; he's not getting any younger. Or doesn't he age?

Gene

[TOTV Team]

Thanks for posting, this is interesting I've been watching your updates. Let's see if investors take profits and sell off.

[glgene]

Thanks for posting, this is interesting I've been watching your updates. Let's see if investors take profits and sell off.

Thanks for the response. I was kind of figuring nobody was really watching this thread, since feedback was so minimal. But I was determined to complete the 7-day report, as I said I would.

Gene

[collie1228]

Gene, thanks for following this and keeping the books. You didn't get a lot of comments, but I noted there are 558 views of this thread, so someone was following your reports. Good job - I hope you do as well next year, and get an even bigger return!

[glgene]

Gene, thanks for following this and keeping the books. You didn't get a lot of comments, but I noted there are 558 views of this thread, so someone was following your reports. Good job - I hope you do as well next year, and get an even bigger return!

What's the big deal of making 1.9% over 7 mkt. trading days? Big deal, some would say (sarcastically). But do the math:

1.9% over 7 mkt. days, on a continuous basis,
= 5.7% over 21 days (there are 21 trading days per month).

5.7% per month x 12 months = 68.4% annualized. Wow!
Now you realize the importance of +1.9% per every 7 days.

Is this doable on a continuous 7-day rollover basis? Highly unlikely, if not impossible (unless you're a real sharpie, and lucky!)

From the stock market peak on Oct. 9, 2007 thru the market low on March 9, 2009, the S&P lost 56%. Ouch! During the entire year of 2011, the S&P lost -0.003% (excl. a 2% dividend). Ouch!

So, to my main point of making 1.9% over 7 days -- during the Santa Claus Rally period -- is worth toasting. Pass the eggnog!

Gene

Note: The 7-day list of daily mkt. results (shown in an earlier msg. in this thread) is merely an exercise that stems from an original idea shown in the Stock Trader's Almanac. I didn't coin the idea; I'm just reporting this year's results. Anybody with a simple computer could have done the same study. I just wish some stock market sharpie, who is lucky, could show me how to really make 68.4% a year. Just for one year! <g>

[Schaumburger]

Gene,

Thank you for posting this information. I have been with my employer for almost 24 yrs. Long story short, the company I work for been through 4 changes in ownership since 1988. After the last change in ownership in 2001, I was able to open a rollover IRA when the 401K money I accumulated from 1988 through 2001. In 2001 I started in the new company's 401K with a zero balance as if I was a brand new employee. My 401K account has done has done pretty well these past 10+ years. In 2011, my rate of return on my 401K was +27%, which was a pleasant surprise. The rate of return on my rollover IRA was -2% which I wasn't too happy about. I expressed my unhappiness about being down 2% in my IRA to the adviser at the company holding my rollover IRA. He took me out of international funds as he blamed my less than great rate of return in 2011 on the economic situation in Europe.

I must admit I don't watch my 401K and my IRA as closely as I should, but when I'm working 50+ hours a week as I did this week I want to use my computer for fun things like reading TOTV. Watching my IRA and 401K performance in 2012 more closely would be a good New Years resolution for me!