T’was Not Grandma Killed By Reindeer

We were wrong. It was not grandma that was killed by the reindeer in the Christmas classic  by Randy Brooks. It was Santa!

Mr. Claus would never have let his herd of traders hanging by hopium for the last four days as they fervently subscribed to tradition. The Stock Market Almanac I’m sure mentions this long-held belief that after Santa finishes his rounds filling up on cookies and milk, disbursing a trillion items (mostly for Amazon) that he saunters down Wall Street pumping up stock prices. Not unlike Janet Yellen et al but you get the idea.

As I write, Santa has exactly sixty minutes to pump up a lot of stocks.

Wall Street always has a response. After 4:00pm ET, Wall Street will bring out the right response: What? No Santa Claus rally. The January Effect is coming. The January Effect is coming.

According to the Stock Trader’s Almanac, the January Effect is a trend where small-cap stocks tend to outperform large-cap stocks from mid-December through the first few months of the new year.

Tax-loss selling, which often appears at the end of a year, marks the low of the worst-performing small-cap stocks. As expectations rise, they are set for better price action, at least short-term.

It is now after 4:00pm ET. Santa is on life support if you accept that this so-called rally actually extends into the first two trading days of January.

Santa… can you hear me?

Stand back.






About wallstreetpirate

Thirty-five years in financial services from insurance to registered investment adviser, and trader (now retired). Currently helping wanna-be traders and experienced alike as a trading coach and mentor. I've been in and around, on top of, in the middle of, and on the bottom of the stock market for a long, long time. Here's all I've learned: Trading is about behavior, psychology, and appreciating what the charts are saying technically. You can't fake it. Either you know what you're doing or you don't. And as much as this isn't rocket science, it takes knowledge and a skill set to survive.
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