Benzinga
Published Nov 12, 2022 17:39
Updated Nov 12, 2022 18:40
Are Santa Claus Rallies Real During Bear Markets? Here's What Stock Market History Says
Benzinga - As the first month in the final quarter of 2022 wraps up, traders and investors are likely excited for a potential Santa Claus Rally.
That's particularly the case this year, which saw the S&P 500 (NYSE: SPX) plunge 27.54% between Jan. 4 and Oct. 13.
Therefore, a Santa Claus Rally would be welcomed by most traders hoping to tee 2023 off on a high note. But first, what is a Santa Claus Rally?
What Is A Santa Claus Rally The phenomenon, given its label by analyst and creator of the Stock Trader’s Almanac Yale Hirsch, generally takes place during the last week of December into the first few days of January. Some years, the rally has taken place over an extended period, beginning Dec. 14 and lasting over two weeks.
Historically, during a Santa Claus Rally, the S&P 500 has risen an average of 1.3% but it doesn’t happen every year so it isn’t 100% predictable.
Past Santa Rallies
Bear Markets A bear market is generally recognized when the S&P 500 declines more than 20% from the high of the previous bull market. This year, the S&P 500 officially dropped into a bear market the week beginning May 16.
Santa Claus Rallies In Bear Markets A look back at the last three bear markets, beginning in 1990.
Out of those 4 times that a Santa Rally has occurred, the S&P 500 increased an average of 3.8%, beating the overall average of Santa Rally spikes by 2.5%.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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