Santa Claus Rally
a.k.a. Santa rally
The tendency for US stocks to rise in the last few trading days of December and the first days of January.
The Santa Claus rally is a seasonal quirk: US stocks have historically tended to rise over the last five trading days of the year and the first two of the new one. Explanations include holiday cheer, year-end bonuses being invested, and thin trading as big players head off on holiday.
It is a historical tendency, not a promise. Thin holiday markets can also produce sharp, ugly moves. Forex traders in particular should watch out for thin liquidity and wider spreads at that time of year.
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