Stock Trader’s Almanac
founder and creator, Yale Hirsch, discovered and named the Santa Claus Rally in
the 1972 in the Almanac and coined the phrase: “If Santa Claus should fail to call, bears may come to Broad and
Wall.”

The “Santa Claus Rally” begins on the open on Christmas Eve
day December 24and lasts until the second trading day of 2021. Average S&P
500 gains over this seven trading-day range since 1969 are a respectable 1.3%. This
is our first indicator for the market in the New Year. Years when the Santa
Claus Rally (SCR) has failed to materialize are often flat or down.

The last six times SCR (the last five trading days of the
year and the first two trading days of the New Year) has not occurred were followed
by three flat years (1994, 2004 and 2015) and two nasty bear markets (2000 and
2008) and a mild bear that ended in February 2016. As Yale Hirsch’s now famous
line states, “If Santa Claus should fail to call, bears may come to Broad and
Wall.”