The 'Santa Claus rally' has arrived; get ready for the 'January effect,' says analyst.
Santa Claus Rally Performance: The Santa Claus rally, occurring from Dec. 24 to Jan. 5, has historically yielded an average gain of 1.6% for the S&P 500, with a 77% success rate over the past 97 years. Conversely, when this rally fails, the following quarters tend to see below-average performance.
January Market Trends: Analysts at Oppenheimer note that when the S&P 500 starts January above its 200-day moving average, it has historically averaged a 1.2% gain, compared to a 0.7% gain when starting below this level.
Momentum Factor Insights: January is typically the worst month for momentum strategies, as prior year losers are often repurchased, reflecting tax loss harvesting from December.
S&P 500 Tracking ETFs: A list of S&P 500 tracking ETFs includes SPY, VOO, IVV, RSP, SSO, UPRO, SH, SDS, and SPXU, providing various options for investors to engage with the index.
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