Mark Hulbert

No Wall Street, there is no Santa Claus rally

As the holiday season approaches, investors hope Santa doesn’t fail to call

Agence France-Presse/Getty Images

Referenced Symbols

There will be no Santa Claus rally in the stock market this month, or in the first three weeks of December.

Pointing this out runs the risk of making me look like Scrooge. But the only year-end U.S. stock market rally that meets traditional standards of statistical significance doesn’t begin until the day after Christmas. Everything before that is no more real than visions of dancing sugar plums.

So be on your guard in coming weeks to what undoubtedly will be a growing number of predictions that a Santa Claus rally will begin. Some even say it’s already started.

This makes for good headlines, and it may even entice brokeage clients to buy more stocks. And no doubt the market will rally at some point in November and December. But the odds of a rally in November and December are not significantly different than at any other time.

I reached this conclusion after measuring the maximum possible rally that occurs over the last two months of the year — from November’s low to December’s high. You’d have to possess remarkable clairvoyance to actually capture this gain, since you’d need advance knowledge of when the low and high will occur. But measuring the rally in this way enables us to determine if there is greater rally potential in the last two months of the year than any other time.

The answer is “no.”

Since 1896, when the Dow Jones Industrial Average DJIA was created, the two-month rally potential is greater in four other two-month stretches than in the November-December period — as you can see from the accompanying chart. While November’s average rally potential is above average, the difference between it and the other months of the calendar does not meet traditional standards of statistical significance.

Wait for the real Santa Claus rally

The Santa Claus rally that is statistically significant doesn’t begin until the day after Christmas. According to the Stock Traders Almanac, this rally lasts from the first trading session after Christmas and continues through the second trading session of the New Year. I calculate that since its creation in 1896, the Dow has risen 77% of time over this period between holidays with an average gain of 1.47%. In contrast, the Dow has risen 56% of time across all other periods of equal length and produced an average gain of just 0.16%. These differences are statistically significant.

The bottom line? The stock market no doubt will rally over the next couple of weeks. But don’t ask Santa to produce that rally — he’s busy these days with his other pre-holiday tasks.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at

More: Why stock-market bulls say ‘Santa rally’ may have already started as equities surge to kick off November

Also read: ‘Stock-market correction is over’ after broad surge amid ‘epic’ market rallies