Santa Saws

Perhaps you’ve already started being good for the 2023 holiday season.  I know I have because my niece Cora keeps tabs on the entire family all year.  No matter what month it is, she can let you know whether you’re trending on the good or bad side of things.  I just bought her a bottle of sparkling maple syrup hoping to curry some favor the next time we visit in case she talks to Santa before I do.

Markets may have tried ingratiating themselves with the big guy at the end of last year.  Over the decades a pattern has emerged known as the Santa Claus rally.  In short, it is described as an upward bias in equity markets around the end of the year.  There is some controversy over what dates it occurs, but this article from Investopedia defines it as happening during the week leading up to Christmas.  Using that framework, it did not materialize in 2022 as all three major U.S. indices were lower.

Another version suggests the event happens during the final five trading days of the year and the first two of the new year.  By this measure, the old jolly fellow came.  Check out this MarketWatch article.  He was a bit stingy, but he left a little something for the market bulls this year, boding well by this saw from Yale Hirsch, founder of the Stock Traders Almanac, “If Santa Claus should fail to call, bears may come to Broad and Wall.”  Perhaps we’ve got a reason for some optimism. 

Market folklore cannot be escaped.  Humans are story-making creatures.  We like our narratives, so we write them daily.  No matter the market’s direction, talking heads create a tale as to why it happened.  Sometimes those anecdotes are probably true, but Atlas is more inclined to view it as markets make headlines and not that those headlines drive markets. Santa is wonderful to believe in, but Atlas believes more in the irrefutable law of supply and demand.