GRINCH THAT STOLE THE SANTA KLAUS RALLY

As the so-called Trump Rally went on for the stock markets, I began to wonder if the Trump Rally was simply borrowing the Santa Klaus Rally?  Well that seems to be the case.  The Santa Klaus Rally wasn't negative but it was barely positive (see figure).

Traditionally the Santa Klaus Rally is the last three trading days of the old year and the first two trading days of the new year.  On this basis, the S and P 500 started the Rally period at 2268.88 on December 27, 2016, and ended it at 2270.75 on January 4, 2017 or an increase of  +0.082%.  The figures for other indices are: +0.19% for both the DJIA and the NASDAQ Composite, +0.58% for the NASDAQ 100, and +0.74% for the Russell 2000.

(Click on figuire to enlarge)

Another piece of Wall Street lore is that the first five trading days of the new year show you how the year will go on stocks: if positive, the year will be positive and, if negative, the year will be negative.  So how did it do.  I'm pleased to say it did pretty good.  The S and P 500 gained 1.34%.  The DJIA gained 0.63%.  The NASDAQ Composite gained 2.76%,  The NASDAQ 100 gained 3.31%; however the Russell 2000 gained only 0.02%.

Though this indicator is positive for 2017, we need to remember that 2016 started as the worst ever period for stocks although the year ended up quite good.  Also consider that most years are positive for the stock market so you would on average do well if you just stayed in the market year after year, called "long-term buy and hold."

* http://www.cnbc.com/2017/01/18/narrowest-dow-range.html
http://www.cnbc.com/2017/01/18/business-euphoria-over-trump-gives-way-to-caution-confusion.html