A previous article looked at whether the Santa Rally exists in the UK stock market.
To recap, below is a chart from that article.
This chart plots the cumulative average daily returns for the FTSE 100 Index for the month of December for the period 1984-2014.
The conclusion of the article was that a Santa Rally can be observed most years, and that the rally usually starts on the 10th trading day of December.
So, what happened in 2015?
The following chart plots the performance of the FTSE 100 Index in December 2015. (NB. The X-axis shows the trading – not calendar – days of December.)
As can be seen, the Index fell fairly steadily for the first ten days of the month; a decline of 7.6% was seen over these ten days. On the 11th day the market rallied, and climbed 7.5% over the following nine days; before weakening slightly on the final two trading days of the year.
The 6.3% rally from the tenth trading day to the final day of the year can be considered the Santa Rally for 2015.
For comparison, the Santa Rally for 2014 is also shown. In this case, the Santa Rally started a day later (on the 11th trading day) of December. In 2014 the Santa Rally returned 6.3%.
So, December can be split into two periods: the “Where’s Santa?” period of the first ten trading days, when people ask if Santa is coming to the market that year, and then the period after the tenth trading day when a Santa Rally is often seen.
Other articles on the Santa Rally.