It is a well-known phenomenon, first discovered by Yale Hirsch and published in his Stock Trader's Almanac. Stocks tend to advance, sometimes sharply, from the day after Christmas to the first two days after New Year's Day.
But now, just as the retailers have extended the Christmas shopping season to Halloween, the Santa Claus Rally has been extended by traders to cover the final two to three months of the year.
In terms of the original Santa Claus Rally, 65% of the time (going back 100 years), stocks have advanced during the week following Christmas Day, and have done better than December as a whole.
In the past eight years, November and December have been extremely bullish. Even during the bear markets, 2000-2003, stocks rallied in the final two months.
