There is no such thing as a Santa Clause Rally, officially, but it has become almost traditional, and we have even come to expect it.
The week between Christmas and New Year’s has traditionally enjoyed a robust stock market (except 2018). The conventional wisdom is that selling to take tax losses has been exhausted by Christmas and that wise investors step in to buy the now-cheaper stocks. Plus, why sell any stocks at a profit, when you can wait a week and delay paying the capital gains tax for a year? Undoubtedly, that is true, but it doesn’t explain the whole thing.
Maybe . . . the mass media knows that negativity sells . . . maybe, even the “nattering nabobs of negativism” (as Spiro Agnew labeled the media) become exhausted by Christmas?
Maybe . . . there is a heightened sensitivity to religion. If there is “Peace on Earth” then the stock market will be just fine.
Maybe . . . there really is something to all this “spirit of Christmas” stuff . . . ??