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Santa Claus Rally


A season of the year during which the stock market exhibits strength. This reflects a seasonal surge in stock prices that almost always takes place between Christmas and New Year’s Day. Many companies use the Santa Claus rally as a base for their annual projections.

The short-term price gains associated with this market phenomenon are often attributed to increased market participation from individual investors. Professional investors tend to be on vacation during the last week of the year, leaving the floor to individual investors, the large majority of whom prefer short selling to buying long. There are some explanations for the Santa Claus rally phenomenon including investor euphoria, tax considerations, investment of Christmas bonuses by employees, etc.


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