If Santa Claus Should Fail to Call...

…Bears may come to Broad and Wall. [Turn Your Images On] [If Santa Claus Should Fail to Call…]( [Turn Your Images On] [Michael Carr, Chief Market Technician]( Children are anxiously awaiting Santa’s return on Christmas. They’re preparing by being extra good. After all, Santa’s watching... They seem to forget that Santa was watching all year. By the time December comes, he’s checking his list. And he’s already decided who’s been naughty or nice. Adults who trade also get excited about Christmas. At least those with money in the stock market do. They begin to anticipate the Santa Claus rally in December. Some are a bit like children, expecting Santa to deliver gifts that exceed their already high expectations. But the Santa Claus rally doesn’t mean prices go straight up in December. It means that historically, stock prices show a tendency to move higher in the second half of the final month of the year. Is that the case again this year? --------------------------------------------------------------- [Turn Your Images On]( [Silicon Valley Billionaires Are Quietly Buying Into What We Call the “Imperium” Boom]( See why Bill Gates, Mark Zuckerberg and Peter Theil are making huge bets on this breakthrough now. [Details here.]( --------------------------------------------------------------- Profits or Coal for Wall Street? You can see the late-month expectation in the weekly chart of the SPDR S&P 500 ETF (NYSE: SPY) below. The blue line is the seasonal trend, and the dashed line shows where we are now. December’s Seasonal Trend [Turn Your Images On] [(Click here to view larger image.)]( The Santa Claus rally tends to start in the third week of the month. The first two weeks tend to be weak. We’re seeing this play out as major indexes trade lower to start December after November’s huge rally. Over the first two weeks of December, the SPY has moved higher 56% of the time since 1993. Overall, the index has gained 62% of the time in a two-week period. The track record isn’t screaming “bearish,” but it’s also not overly bullish. Now is an ideal time to act like children awaiting Santa’s arrival and prepare. Investors should plan for the year-end rally and decide how they will take advantage of the short-term opportunity. That is, if it comes. Although we get a Santa Claus rally 75% of the time, it’s even more important to be ready if there isn’t one. You may have heard of the old saying: “If Santa Claus should fail to call, bears may come to Broad and Wall.” That one is backed by testing. When we don’t get a Santa Claus rally, January has shown a small loss on average. Returns over the next year also tend to be below average. The Santa Claus rally isn’t really an investment strategy. But it still gives us an idea of what to expect after December. If Santa delivers a lump of coal to Wall Street, we should prepare for turmoil in the upcoming year. But we’ll be ready for that… Until next time, [Michael Carr signature] Michael Carr Chief Market Technician, Money & Markets --------------------------------------------------------------- [Turn Your Images On]( From our Partners at Banyan Hill Publishing. [What You Need to Know About the Middle-Class Massacre]( A looming financial event that one expert calls the “Middle-Class Massacre” will soon devastate millions of hardworking Americans. When it strikes, and all his research proves it will strike in 2023, he predicts stocks will crash 50% ... real estate will be slashed in half ... unemployment will surge to record highs ... and the wealth of millions will be decimated as the biggest bubble in history bursts. 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