As I mentioned in my post last year “the Santa Claus rally is the rise in stock prices in the month of December and is usually seen on December 26 to December 31 in most stock markets worldwide. However, it doesn’t happen at the exact dates mentioned but yes, it usually takes place after Christmas day and before New Year’s eve. The usual factors behind the Santa Claus Rally phenomenon includes people trying to complete trades and make adjustments for tax purposes, happiness around Wall Street that triggers buying, injection of additional funds into the market including people who are investing their Christmas bonuses and the fact that the pessimists are usually on vacation this week to gain some positivity and good vibes”.
Technically, the Santa Claus rally is more likely to hit the Dow Jones Industrial Average (DJI) once again because of its current chart setup. As you can see, there could be an 8-month inverted head and shoulders forming with the right shoulder looking like a small ascending triangle. In addition, the MACD has made a bullish crossover and the index is now moving above the 50, 100 and 200-day moving averages. With these indicators in-line, we could expect the DJI to breakout from this bullish chart pattern soon. If it does, our target could be the 13,500 marker. However, there could be some resistances at the 12,800.00-13,000.00 level.
Remember, when the US stock market goes up, most stock markets usually follow. But then again, this time shouldn’t be given to trading and working since it’s the time to have fun, celebrate the time with our love ones and be thankful of what we have. Let’s share the blessings, cheers and peace to everyone! Happy Holidays and Merry Christmas!