The Santa Rally and the Perfect Holiday Gift

There is a phenomenon that seems to happen every year, although there are never any guarantees. The Santa Claus Rally was discovered in 1972 by Yale Hirsch, founder of the Hirsch Organization and the creator of the Stock Trader’s Almanac.

The market has statistically predictable patterns which hold that an upward movement runs from Dec. 28 to Jan. 2 of the following year. Since 1896, the Dow Jones gained an average of 1.7% during this period, obtaining a positive return 77% of the time.

We are not sure why this occurs. Some say there’s an institutional rebalancing of funds for year’s end. Others say institutional investors tend to be on vacation that last week and retail traders drive up prices. There is also the hypothesis that there is a seasonal anomaly causing stock prices to increase in January more than any other month and investors always anticipate this move early on. Still others say there is a slowdown in tax-loss harvesting, which has a deadline of Dec. 31. Optimism in the new year and holiday spending also contribute to the causes. Whatever the reason, by knowing this, we can ensure our bias is to the upside during these last few trading days of the year.

Already, we’ve seen the inclination for markets to break resistance we have not seen in almost two years. The last time SPY was at these levels was in January 2021. This year’s rally is undoubtedly driven by the belief that the Fed is done raising rates and that it may, in fact, start reducing them as early as March. The shear optimism is enough to induce confidence in the market, which is seemingly oblivious to the human element and the associated crises across the pond. Two major wars are being waged in the Middle East and Europe, yet the market seems unfettered by any of them.

The market has no emotion. But we do.

Leading into the human aspect of trading, one gentleman with whom I spoke with years ago, Tom, had an amazing idea for his holiday gift giving. He explained how the last thing any of his three adult children needed was “stuff.” “They had everything,” he told me — something that would put any normal parent in panic mode. What do you give kids who have everything and want for nothing?

His answer just about floored me. He gave each child a trading account, $5,000 seed money and our Ultimate Training Course with a subscription to our Trading Room. He even had them competing against each other and set them various milestones to reach, with accompanying rewards. This was even better than I had done by simply teaching my own kids how to trade stock options.

There is something very comforting in knowing that your children are able to fend for themselves in this insane world. As you know, there is no security in a job. In fact, the very word, J.O.B, is an acronym for “Just Over Broke.” It seems like you will always spend more than you earn, and you will always be on the wrong side of the calendar when your money runs out before the month. My son and daughter, both accomplished in their own right, never have to ask me for money anymore. They simply go to the stock market. I am liberated from further supporting them!

That leads me to suggest something that is crazy as it sounds. In this day of economic uncertainty, political instability and financial insecurity, why not give a gift that will be appreciated long after the holidays are over… give the gift of learning to trade SPY options. Let them learn capitalism at its purest.

We have several awesome programs you may want to consider. The Ultimate Training Course puts your loved ones on solid ground by teaching everything we do and everything we trade. No stone is left unturned. The program is online, in bite-size form with each subject covered in about an hour-and-a-half-long video. Pause, rewind and play as many times as you want.

Couple this with the Trading Room, where our programs come to life,  9:20 to 10:30 a.m., ET, daily. Traders plan their lives around the Trading Room. Some have been members for many years. They make money. So will your children when you present them with an opportunity unlike anything they’ve ever imagined.

Still undecided? Tune in to our Intro to Trading, Sunday night at 8 p.m. ET, as we discuss the possibilities.

What’s better than knowing how to trade? Knowing that your kids know how to trade!