A Santa Claus Rally for the JSE in 2022?

8 בדצמ׳ 2022

What is expected from a Santa Claus Rally?

The Santa Claus rally, is essentially where we see stock prices locally and globally rise and close off positively by the end of December.

And so, we can expect a rally in December which we can all profit from…

Why December? We aren’t 100% sure but we have some speculations on why the market tends to rally…

#1: Investment managers cut down on their taxes

This is the time when you’ll see investors and investment managers, selling their stocks to lock in tax reductions before the end of the year.

Once they sell their positions, they then buy other stocks and markets that they believe will rally in the next year.

The buying of these stocks, leads to a rise in stock prices which pushes the stock market indices up.

Theory #2: Investors enjoy their bonuses by buying into investments

Investors also like to spend their bonuses on investments like stocks…

And when they buy, demand picks up.

And this leads to higher stock market prices.

Speculation is one thing.

But nothing confirms a Santa Claus Rally more than proof in the charts…

The JSE has gone up 14 out of 19 Decembers!

What you see, is the monthly JSE-ALSI stock market chart since 2003…

Looking at the chart you can see how each December (Vertical blue line) performed from 2003 up ‘till 2021

Year Gain/Loss

Year Gain/Loss

2003 : 7.39%
2004 : 1.28%
2005 : 6.84%
2006 : 3.90%
2007 : -4.99%
2008 : 0.51%
2009 : 2.62%
2010 : 6.69%
2011 : -3.26%
2012 : 2.72%
2013 : 3.27%
2014 : -0.53%
2015 : -1.15%
2016 : 0.48%
2017 : -1.33%
2018 : 4.63%
2019 : 3.51%
2020 : 3.83%
2021 : 4.66%

So, there’ve been 14 out of 19 Decembers (74% win rate) that have shown positive gains.

And in total, the JSE has accumulated 41.07% gains in all of those Decembers.

This means, you have a higher chance of profiting from buying this Christmas than selling.

And right now, this December the JSE ALSI 40 is already up an insane 14.48% gain.

And I am seeing no signs of a slow down yet…

I guess a Santa Claus rally is more likely than not, but we have had three to four winning years in a row... Things are looking good for now but the month is young...

Do you think we will have a JSE Santa Claus Rally?

Let me know.

Trade well, live free.

Timon
MATI Trader