Next week is Christmas, and the anticipated Christmas rally has not occurred. The U.S. stock market is down, and the cryptocurrency market, which has become a bloodbath for U.S. stocks, is also in a sea of red. Now we might have to wait for Trump to speak out; everyone should manage their risks well.
Jeff Hirsch, editor of the "Stock Trader's Almanac," points out that the absence of a "Santa Claus rally" often signals a bear market or a period of potentially lower stock prices in the future.
Data from LPL Financial traces back to the mid-1990s, and over the past 20 years, there have been 6 instances where the "Santa Claus rally" did not occur. In these six instances, the S&P 500 index experienced declines in January of the following year 5 times. The significant bear markets of 2000 and 2008 both followed years when the "Santa Claus rally" was absent.
1999 Santa Claus rally did not occur 2000 Internet bubble burst, U.S. stocks entered a prolonged bear market.
2005 Santa Claus rally did not occur 2006 market was overall stable, but January of the following year showed weakness.
2007 Santa Claus rally did not occur 2008 global financial crisis erupted, U.S. stocks faced a major bear market.
2015 Santa Claus rally did not occur Early 2016 market experienced a mild bear market.
2022 Santa Claus rally did not occur The overall performance of U.S. stocks that year was poor, and the S&P 500 index recorded its worst annual performance since 2008.
