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Investment Management: Will The Santa Clause Rally Happen In the Stock Market | Stock Talk Podcast - YouTube
Channel: Oak Harvest Financial Group
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hey i'm chris parris chief investment
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officer with oak harvest financial group
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we're an investment management and
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retirement planning advisor located in
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houston texas and welcome to our
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december 17th youtube stock talk keeping
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you connected to your money well the
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holidays are upon us and it's time to
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talk about santa claus whether you
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believe in the man or not or celebrate
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the christmas holidays or not
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historically the positive seasonal
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effects on the overall stock market is a
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real historical phenomenon statistically
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speaking given our 2022 market outlook
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and given we are filming this segment
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before the federal reserve met earlier
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this week we are not going to try to
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predict whether the anomaly in the
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calendar year continues this year
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and given our longer term focus for
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clients we won't be trying to trade
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tactically around whether it happens
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over the next two weeks however our
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investment team did want to put out some
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data to educate our clients and viewers
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on the tactical trading strategy in its
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historical pattern and viewers please
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recall that year to date against the
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calls from precedent market action it's
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been a very normal first year
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presidential cycle in the stock markets
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so here's the data while many
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strategists talk about the strong
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seasonal tendencies for the month of
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december of the 12 months in the year it
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has the highest percentage chance of
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being positive as it is up almost 75
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percent
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or three out of four years few
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strategists break it down and discuss
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how december by itself is loan
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unique month whose inter-month trading
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pattern is exactly opposite the other 11
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months out of the year so what do i mean
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by this unlike the other 11 months
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december shows much stronger return over
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the last 10 trading days of the year
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versus the first 10 trading days
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according to merrill lynch data since
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1929 that's over 90 years of data the
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first 10 trading days of december have
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basically been an average return
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of zero
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the first half of december a big zero
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however the last 10 trading days are
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much stronger averaging almost one and a
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quarter percent return into year end
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hence the phrase the santa claus rally
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additionally the santa party has usually
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hung around until early january as the
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first 10 trading days of january have
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had an average return of about 0.75
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percent or three quarters of a percent
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so cumulatively the 20-day return from
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the second half of december through the
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first 10 days of january has averaged 2
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percent for those that are tactically
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inclined that's a pretty nice expected
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return with pretty good odds
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many viewers will ask well if it's so
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well researched and advertised why does
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it keep working given the efficient
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market thesis
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well listeners that's a great question
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with no perfect answer however i will
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give you some recent data why it is more
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likely than not to happen again this
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year we've discussed investor sentiment
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and positioning many times over the past
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three years in our podcasts
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well the first data set published by aai
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that data set being an individual
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investor sentiment hit its highest
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bearish reading for all of 2021 post the
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thanksgiving early december sell-off
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recall the investment team at oakharves
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follows this data as it tends to be a
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great contrary indicator on the market's
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next move investors were nearing
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euphoric levels in mid-november near the
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market's short-term top and then in a
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matter of two weeks they were nearing
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max fear in early december after the
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market had dropped a little over five
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percent so much for buy low and sell
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high the second data set i monitor in
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real time is the cost of insuring your
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portfolio against declines and i've
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spoken about this cost multiple times
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over the last three years listeners on
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friday december 3rd in the depth of
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margin calls for selling in panic
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what did our insurance indicator read
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well it's saying the same thing the near
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same panic reading as friday october
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30th 2020 pre-presidential election
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longer-term listeners might recall that
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being the low for the last 12 months and
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the day we released our podcast titled
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waiting no more this is how early bull
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markets look will we all look back at
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december 3rd 2021 in the next 10 to 12
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months is the markets low for the
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subsequent 12 months i don't know but i
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do know that this reading tells us that
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investors are no longer euphoric and
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bullishly positioned for a year-end
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santa claus rally
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so if pressed on our opinion of an
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upcoming year in santa claus rally i
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would venture a guess that whether you
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believe in the man the myth or the
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legend that the odds are high that santa
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delivers his gifts on time to close out
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what has been by oak harvest forecast
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for over 12 months a very normal
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profitable and merry year viewers give
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us a call here at oak harvest and ask to
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speak to one of our advisors let us help
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you craft a financial plan that meets
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your retirement goals needs first in
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your greed second give us a call at
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877-896-0040
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we are here to help you on your
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financial journey into and through your
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retirement years many blessings stay
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safe and have a great weekend i'm chris
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parris with oak harvest
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[Music]
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you
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