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Trading the Santa Rally: How to Ride the Supposed Year-End Surge #SPX (1)đđ
The Santa Rally â a festive event characterized by silent nights and active markets. Every December, traders whisper about it with a mix of excitement and skepticism. But what exactly is this supposed year-end market surge? Is it a gift from the markets or just a glittery myth? Letâs unwrap the truth.
đ What Is the Santa Rally?
The Santa Rally refers to the tendency for stock markets to rise during the last few trading days of December and sometimes even the first few days of January. Itâs like a financial advent calendar, but instead of dark chocolate, traders hope for green candles.
The origins of this term arenât entirely clear, but the event is widely observed. Analysts cite everything from holiday cheer to quarter-end, year-end portfolio adjustments as possible reasons. But beware â like a wrongly wrapped gift, the rally doesnât always deliver what you expect.
đ Fact or Festive Fiction?
The Numbers Donât Lie (Mostly):
Historical data does show that markets have a knack to perform well during the Santa Rally window. For instance, the S&P 500 SPX has delivered positive returns in about 75% of the observed periods since 1950. Thatâs better odds than guessing whoâs going to win the âUgly Sweater Contestâ at the office.
Not Guaranteed:
However, letâs not confuse correlation with causation. While historical trends are nice to know, the market isnât obliged to follow tradition. Geopolitical events, Fed decisions, or even a rogue tweet can easily knock this rally off course (especially now with the returning President-elect).
đ Why Does the Santa Rally Happen?
1ď¸âŁ Holiday Cheer: Investors, like everyone else, might be more optimistic during the holidays, leading to increased buying momentum. After all, not many things can say âjoy to the worldâ like a bullish portfolio.
2ď¸âŁ Tax-Loss Harvesting: Fund managers sell off losing positions in early December to offset gains for tax purposes. By the end of the month, theyâre reinvesting, potentially pushing prices higher.
3ď¸âŁ Low Liquidity: With many big players sipping mezcal espresso martinis on the Amalfi coast, trading volumes drop. Lower liquidity can amplify price movements, making small buying pressure feel like a full-blown rally.
4ď¸âŁ New Year Optimism: Who doesnât love a fresh start? Many traders sign off for the quarter on a positive, upbeat note and begin setting up positions for the year ahead, adding to upward swings.
âď¸ The Myth-Busting Clause
While these factors seem plausible, not every Santa Rally is a blockbuster. For example, in years of significant economic uncertainty or bearish sentiment, the holiday spirit alone isnât enough to lift the market.
đ How to Trade the Santa Rally (Without Getting Grinched)
1ď¸âŁ Set Realistic Expectations: Donât expect a moonshot. The Santa Rally is more of a sleigh ride than a rocket launch. Focus on small, tactical trades instead of betting the farm on a rally (and yes, crypto included).
2ď¸âŁ Watch Key Sectors: Historically, consumer discretionary and tech stocks often perform well during this period. Consider these areas, but always do your due diligence.
3ď¸âŁ Manage Your Risk: With low liquidity, volatility can spike unexpectedly. Tighten your stop-losses and avoid overleveraging â Santa doesnât cover margin calls.
4ď¸âŁ Keep an Eye on Macro Events: Is the Fed hinting at rate cuts (hint: yes it is)? Is inflation stealing the spotlight (hint: yes it is)? These can overshadow any seasonal trends.
âď¸ Crypto and Forex: Does Santa Visit Here Too?
The Santa Rally isnât exclusive to stocks. Forex markets can also see year-end movements as hedge funds, banks and other institutional traders close out currency positions.
Meanwhile, traders in the crypto market have gotten used to living in heightened volatility not just during the holidays but at any time of the year. More recently, Donald Trumpâs win was a major catalyst for an absolute beast of an updraft.
đ Closing Thoughts: Naughty or Nice?
The Santa Rally is a fascinating mix of tradition, psychology, and market mechanics. While itâs fun to believe in a market jolly, itâs better to stay prepared for anything out of the ordinary.
So, are you betting on a rally this year, or are you staying on the sidelines? Letâs discuss â drop your thoughts in the comments below and tell us how youâre planning to trade the year-end rush! đ đ
#SPX500 #SPX #BinanceLaunchpoolVANA #BinanceListsVelodrome #Write2Earn!
đ What Is the Santa Rally?
The Santa Rally refers to the tendency for stock markets to rise during the last few trading days of December and sometimes even the first few days of January. Itâs like a financial advent calendar, but instead of dark chocolate, traders hope for green candles.
The origins of this term arenât entirely clear, but the event is widely observed. Analysts cite everything from holiday cheer to quarter-end, year-end portfolio adjustments as possible reasons. But beware â like a wrongly wrapped gift, the rally doesnât always deliver what you expect.
đ Fact or Festive Fiction?
The Numbers Donât Lie (Mostly):
Historical data does show that markets have a knack to perform well during the Santa Rally window. For instance, the S&P 500 SPX has delivered positive returns in about 75% of the observed periods since 1950. Thatâs better odds than guessing whoâs going to win the âUgly Sweater Contestâ at the office.
Not Guaranteed:
However, letâs not confuse correlation with causation. While historical trends are nice to know, the market isnât obliged to follow tradition. Geopolitical events, Fed decisions, or even a rogue tweet can easily knock this rally off course (especially now with the returning President-elect).
đ Why Does the Santa Rally Happen?
1ď¸âŁ Holiday Cheer: Investors, like everyone else, might be more optimistic during the holidays, leading to increased buying momentum. After all, not many things can say âjoy to the worldâ like a bullish portfolio.
2ď¸âŁ Tax-Loss Harvesting: Fund managers sell off losing positions in early December to offset gains for tax purposes. By the end of the month, theyâre reinvesting, potentially pushing prices higher.
3ď¸âŁ Low Liquidity: With many big players sipping mezcal espresso martinis on the Amalfi coast, trading volumes drop. Lower liquidity can amplify price movements, making small buying pressure feel like a full-blown rally.
4ď¸âŁ New Year Optimism: Who doesnât love a fresh start? Many traders sign off for the quarter on a positive, upbeat note and begin setting up positions for the year ahead, adding to upward swings.
âď¸ The Myth-Busting Clause
While these factors seem plausible, not every Santa Rally is a blockbuster. For example, in years of significant economic uncertainty or bearish sentiment, the holiday spirit alone isnât enough to lift the market.
đ How to Trade the Santa Rally (Without Getting Grinched)
1ď¸âŁ Set Realistic Expectations: Donât expect a moonshot. The Santa Rally is more of a sleigh ride than a rocket launch. Focus on small, tactical trades instead of betting the farm on a rally (and yes, crypto included).
2ď¸âŁ Watch Key Sectors: Historically, consumer discretionary and tech stocks often perform well during this period. Consider these areas, but always do your due diligence.
3ď¸âŁ Manage Your Risk: With low liquidity, volatility can spike unexpectedly. Tighten your stop-losses and avoid overleveraging â Santa doesnât cover margin calls.
4ď¸âŁ Keep an Eye on Macro Events: Is the Fed hinting at rate cuts (hint: yes it is)? Is inflation stealing the spotlight (hint: yes it is)? These can overshadow any seasonal trends.
âď¸ Crypto and Forex: Does Santa Visit Here Too?
The Santa Rally isnât exclusive to stocks. Forex markets can also see year-end movements as hedge funds, banks and other institutional traders close out currency positions.
Meanwhile, traders in the crypto market have gotten used to living in heightened volatility not just during the holidays but at any time of the year. More recently, Donald Trumpâs win was a major catalyst for an absolute beast of an updraft.
đ Closing Thoughts: Naughty or Nice?
The Santa Rally is a fascinating mix of tradition, psychology, and market mechanics. While itâs fun to believe in a market jolly, itâs better to stay prepared for anything out of the ordinary.
So, are you betting on a rally this year, or are you staying on the sidelines? Letâs discuss â drop your thoughts in the comments below and tell us how youâre planning to trade the year-end rush! đ đ
#SPX500 #SPX #BinanceLaunchpoolVANA #BinanceListsVelodrome #Write2Earn!
See original
Since the creation of the S&P 500 in 1957, there have been 5 years with a decline of more than 10%
1973: 17.4%
1974: 36.7%
2002: 23.4%
2008: 38.5%
2022: 19.4%
The 5-year average is 27.08%
Which is close to the 27.6% in the above chart
The premise is that both parties eventually sat down to negotiate again
#çžĺ˝ĺ ĺžĺ łç¨ #SPX500
1973: 17.4%
1974: 36.7%
2002: 23.4%
2008: 38.5%
2022: 19.4%
The 5-year average is 27.08%
Which is close to the 27.6% in the above chart
The premise is that both parties eventually sat down to negotiate again
#çžĺ˝ĺ ĺžĺ łç¨ #SPX500
Impact of Trade Wars on S&P 500:
Beginning of Trade War in 2018:
Date: March 2018
Decline: Approximately 18.2%.
Escalation of Trade War in 2019:
Date: May 2019
Decline: Approximately 7.4%.
New Trade War in 2025:
Date: April 3, 2025
Decline: 12% (as of April 7)
Taking the average of the first two, the decline is 12.8%
Estimated S&P 500 bottom should be at 4450
This also counts as achieving a nearly 30% decline
#ĺ łç¨
Beginning of Trade War in 2018:
Date: March 2018
Decline: Approximately 18.2%.
Escalation of Trade War in 2019:
Date: May 2019
Decline: Approximately 7.4%.
New Trade War in 2025:
Date: April 3, 2025
Decline: 12% (as of April 7)
Taking the average of the first two, the decline is 12.8%
Estimated S&P 500 bottom should be at 4450
This also counts as achieving a nearly 30% decline
#ĺ łç¨
See original
1/ #spx500 S&P continues to fluctuate near the previous high. The economic data released last week continue to support optimistic economic expectations (durable goods data surged and Q2 GDP revised upward), and the PCE, which is basically as expected, also reflects the downward trend in inflation.
Therefore, the trend of oscillating upward may continue in early September, and the hype of economic soft landing and interest rate cuts will continue. After the September interest rate cuts are implemented and the corporate buyback window is closed, the correction will start.
2/ The big non-agricultural data on Friday will determine whether the narrative of economic soft landing can continue.
September is an eventful month with many major events, and it is also a month with many declines in history.
9.6 Big non-agricultural
9.10 US presidential debate
9.11 US August CPI
9.18 Federal Reserve interest rate meeting
9.29 CZ is released from prison
3/ The decline curse in September also applies to #BTC , with a probability of decline of nearly 80%.
So everyone postponed the expectation of rising to October. After all, after October, the good market seems to last until March next year.
Of course, statistical data focuses on the sample size, so neither of them can be fully trusted, just to increase some thoughts.
4/ Moreover, if the US stock market can continue to rise under the same macroeconomic situation of stability with worries, it depends on strong corporate profits.
The currency circle, which has no innovation, no new narrative, and no incremental funds in the past six months, does lack endogenous rising momentum.
The market has been shouting for a long time about the darkness before dawn, but it turns out that it is darker after the darkness. I donât know if itâs over, but itâs definitely closer, so we should be more patient at this time.
5/ BTC closed with a long lower shadow on the monthly line, and the overall trend is still in the downward channel;
The weekly line engulfed the gains of last week, and the trend is not optimistic. If the short-term support of 57,000 cannot be supported, it will need to continue to test the previous low and the lower edge of the channel support 52,500-53,500.
The key support is the weekly MA60 support (mid-term rising dividing line) -48,600
Therefore, the trend of oscillating upward may continue in early September, and the hype of economic soft landing and interest rate cuts will continue. After the September interest rate cuts are implemented and the corporate buyback window is closed, the correction will start.
2/ The big non-agricultural data on Friday will determine whether the narrative of economic soft landing can continue.
September is an eventful month with many major events, and it is also a month with many declines in history.
9.6 Big non-agricultural
9.10 US presidential debate
9.11 US August CPI
9.18 Federal Reserve interest rate meeting
9.29 CZ is released from prison
3/ The decline curse in September also applies to #BTC , with a probability of decline of nearly 80%.
So everyone postponed the expectation of rising to October. After all, after October, the good market seems to last until March next year.
Of course, statistical data focuses on the sample size, so neither of them can be fully trusted, just to increase some thoughts.
4/ Moreover, if the US stock market can continue to rise under the same macroeconomic situation of stability with worries, it depends on strong corporate profits.
The currency circle, which has no innovation, no new narrative, and no incremental funds in the past six months, does lack endogenous rising momentum.
The market has been shouting for a long time about the darkness before dawn, but it turns out that it is darker after the darkness. I donât know if itâs over, but itâs definitely closer, so we should be more patient at this time.
5/ BTC closed with a long lower shadow on the monthly line, and the overall trend is still in the downward channel;
The weekly line engulfed the gains of last week, and the trend is not optimistic. If the short-term support of 57,000 cannot be supported, it will need to continue to test the previous low and the lower edge of the channel support 52,500-53,500.
The key support is the weekly MA60 support (mid-term rising dividing line) -48,600
See original
Since the creation of the S&P 500 in 1957, there have been 5 years with a decline of more than 10% each year
1973: 17.4%
1974: 36.7%
2002: 23.4%
2008: 38.5%
2022: 19.4%
The 5-year average is 27.08%
This is quite similar to the 27.6% shown above
The premise is that both sides ultimately sat down to negotiate again
#çžĺ˝ĺ ĺžĺ łç¨ #SPX500
1973: 17.4%
1974: 36.7%
2002: 23.4%
2008: 38.5%
2022: 19.4%
The 5-year average is 27.08%
This is quite similar to the 27.6% shown above
The premise is that both sides ultimately sat down to negotiate again
#çžĺ˝ĺ ĺžĺ łç¨ #SPX500
Impact of Trade Wars on S&P 500:
Beginning of Trade War in 2018:
Date: March 2018
Decline: Approximately 18.2%.
Escalation of Trade War in 2019:
Date: May 2019
Decline: Approximately 7.4%.
New Trade War in 2025:
Date: April 3, 2025
Decline: 12% (as of April 7)
Taking the average of the first two, the decline is 12.8%
Estimated S&P 500 bottom should be at 4450
This also counts as achieving a nearly 30% decline
#ĺ łç¨
Beginning of Trade War in 2018:
Date: March 2018
Decline: Approximately 18.2%.
Escalation of Trade War in 2019:
Date: May 2019
Decline: Approximately 7.4%.
New Trade War in 2025:
Date: April 3, 2025
Decline: 12% (as of April 7)
Taking the average of the first two, the decline is 12.8%
Estimated S&P 500 bottom should be at 4450
This also counts as achieving a nearly 30% decline
#ĺ łç¨
See original
Bitcoin's Decoupling from the U.S. Stock Market: Has Bitcoin Entered the Phase of Becoming a Safe-Haven Asset?
Has Bitcoin entered the phase of becoming a safe-haven asset?
Through the graphical comparison between $BTC and the #SPX500 index, we notice a strong correlation between the two assets until March 2025, where the movements of the two markets were quite similar, reflecting the general interconnection.
But the turning point came with Trump's announcement of a new tariff package, which caused a sharp decline in the SPX500 index, while Bitcoin showed remarkable resilience and even decoupled from stock performance.
Through the graphical comparison between $BTC and the #SPX500 index, we notice a strong correlation between the two assets until March 2025, where the movements of the two markets were quite similar, reflecting the general interconnection.
But the turning point came with Trump's announcement of a new tariff package, which caused a sharp decline in the SPX500 index, while Bitcoin showed remarkable resilience and even decoupled from stock performance.
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