We have stood on Yale Hirsch’s shoulders and combined his
#SantaClausRally (SCR) with his #JanuaryBarometer (JB) and our #FirstFiveDays
“Early Warning” System (FFD) to create our “January Indicator Trifecta.”

Stock Trader’s Almanac
founder and creator, Yale Hirsch (97 years old and counting!), discovered and
named both the “Santa
Claus Rally” and the “January Barometer”
in 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” began today 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 the first indicator of our “January Indicator Trifecta” for the market in
the New Year. Years when the “Santa
Claus Rally” (SCR) has failed to materialize are often flat or down.

The best case, most bullish scenario is when all three
indicators, SCR, FFD and JB, are positive as shown in table below. In 31
previous Trifecta occurrences since 1950, S&P 500 advanced 87.1% of the
time during the subsequent eleven months and 90.3% of the time for the full
year. However, a January Indicator Trifecta does not guarantee the year will be
bear or correction free. Of the four losing “Last 11 Mon” years 1966, 1987 and
2011 experienced short duration bear markets (2011, S&P 500 –19.4% peak to
trough). In 2018, S&P 500 retreated 19.8% from its September high close to
its December low close.