Is the Santa Claus Rally Real? Here’s what the Math Says

Flip on CNBC or Bloomberg and you’ll hear its spokespeople talk about the “Santa Claus Rally” — an event that occurs between Christmas and New Year’s.

The idea is simple.

Funds are done with tax-loss selling and will look to pad their portfolios before 2024.

Except the markets actually do worse during the last week of the year.

We backtested the following idea:

• Buy the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) the day after Christmas at the open
• Sell the close on New Year’s Eve

Since 1993, this idea worked out 14 out of 30 times, or 46.7% of the time.

An average week for the SPY has it close higher than it opens ~53.5% of the time.

Statistically speaking, you’re better off betting against the market during the last week of the year.

There’s a lot that can and will likely go wrong before the end of the year.

Right now, things are hot.

• The S&P 500 is a stone’s throw away from its all-time highs.
• Unemployment is low.
• Inflation is slowing.

That will quickly change.

The data above highlights the seasonal bearishness that extends from Christmas through the New Year.

On top of that, we got our final Fed interest rate decision of the year.

Every asset from stocks to bonds got bought up faster than any time in the last few months.

Chairman Jerome Powell and company said they were done hiking interest rates and even hinted at three possible rate cuts in 2024.

We think they’ve sorely underestimated the housing affordability crisis.

You see, despite overall inflation dropping, a huge chunk of which was driven by energy and used vehicles, housing prices refuse to drop.

In the latest Consumer Price Index (CPI) reading, shelter prices (housing’s equivalent) increased by 0.4% month over month. The lowest it has been in the last six months was 0.3%. At that pace, annual housing inflation is between 3.7% and 4.9%.

If the 2008 crash taught us anything, it’s that out-of-control housing prices will end badly.

And let’s not forget that geopolitics hasn’t been this chaotic in decades.

We’re knee-deep in two wars.

But the real danger is China forcefully annexing Taiwan, along with its semiconductor industry.

While companies like Intel (NASDAQ: INTC) work at a feverish pace to open new manufacturing in places like Ohio and Arizona, their eventual output would be a drop in the bucket compared to what we import from Taiwan (and even from China).

Now consider how much of the latest rally was driven by artificial intelligence (AI) and innovation.

Stocks like Microsoft (NASDAQ: MSFT) and Nvidia (NASDAQ: NVDA) are hitting new, all-time highs.

How long would their shares hold up if they lost access to critical component suppliers?

A Profitable Alternative

There’s a lot that can and will likely go wrong in before the end of the year.

And no one has a crystal ball to tell them the future.

But that doesn’t mean there isn’t opportunity.

Maybe the best play in this market is day trading the SPY.

We know it sounds crazy.

But what if we told you it’s possible to do this profitably and more consistently than you believe?

Hugh Grossman’s DayTradeSPY Signal boasts an incredible 96% WIN RATE, with an average profit of 5% per trade.

That means more consistency with daily returns.

But here’s why that’s especially important as we close out 2023 and start 2024.

We mentioned that Hugh Grossman aims for a roughly 5% profit on each trade.

This isn’t some arbitrary number.

Hugh did some deep math to determine the optimal exit, and here’s what he discovered:

As you probably suspected, the more you try to get out of each trade, the less likely you are to win the trade.

Hugh’s math showed the best total payout potential landed at a 5% profit target.

That’s all fine and dandy, but what about the losses?

Few as they may be, the losses are larger than the wins.

And if you traded futures or the SPY itself, you could have serious drawdowns.

However, Hugh leverages the power of options to manage his risk to a defined amount on every trade.

For example, buying an option contract for the SPY that was priced at $3.00 would cost you a total of $300.

A 5% profit on that option contract would net you $15 per contract.

What if you took a 50% loss?

That would cost you $150, which seems like a lot.

But remember, you’d win 96% of the trades.

If you made 100 trades, you would:

• Win 96 of them, making $1,440.
• Lose four of them, costing you $600.
• Walk away up $840.

The best part about DayTradeSPY Signal is that you don’t need to be tied to your computer all day.

The trades often last for minutes at a time.

Hugh designed his program to be accessible to everyone, making it possible for those who are working full-time to actively participate in the markets.

That’s why Hugh is offering a test drive of DayTradeSPY Signal to Wealth Whisperer members through the end of the year.

Don’t miss your chance to earn the freedom you deserve!

Click here to learn more about DayTradeSPY Signal!