Xmas/Santa Claus Rally

December 23, 2008 12:45pm by Barry Ritholtz

Bob Bronson sends us this historical average of the Christmas and Santa Claus rallies combined

Bob adds: For the last two days — – first two days of the nine-trading day, year-end holiday period — the SPX is down 2.8%. This is consistent with both its underperforminghistorical average since 1949 and the currently much higher volatility environment.

If the next seven trading days continue to follow this non-random pattern, the bear market rally will outperform through Jan 5, which could also be consistent with the pending sell signal for the end of blue #4 in the second chart below. In the third chart below that blue #4 turning point is red #4. Sorry for any color confusion.

We put out our latest Growth Cycle working model in the third chart below some seven weeks ago, so perhaps we should take some trend-following comfort that Steven Hochberg of EWI is now considering it an alternative EWT wave count.

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