Naughty Or Nice? 6 Stocks To Watch For 2024 Santa Rally
Table of Contents
‘Tis the season to be…bullish?
It’s that time of year again—Christmas trees are up, carols are playing, and with just days left until Christmas, you’re probably racing through last-minute shopping. Malls are packed, traffic is a mess, and your holiday to-do list keeps growing. But what are investors doing?
Probably riding the infamous Santa Rally.
The Santa Rally isn’t just a Wall Street legend—it’s the real deal. The term refers to the stock market’s historic pattern of posting gains in the last five trading days of December and the first few trading days of January.
The S&P 500 has been incredibly consistent, rising 79% of the time. This works out to an average return of about 1.3% since 1950 during this seven-day trading period. Except for the 2022 bear market, we’ve seen the U.S. market soar for the last five years!
What’s behind the Santa Rally?
It isn’t exactly written in stone, but several theories have made the rounds over the years.
- Holiday cheer & New Year anticipation = Investor optimism. When investors adopt a hopeful attitude, it drives a more bullish outlook.
- Low trading volumes: With many institutional investors and big players on vacation, trading volumes tend to drop and retail investors (like you and me) can make moves that will have a bigger impact, often pushing the markets up.
- Portfolio rebalancing: In early December, investors typically sell underperforming stocks to offset capital gains taxes. By the end of the month, many reinvest those funds ahead of the New Year, driving the market up.
The 2024 setup for a Santa Rally
2024 has been a year of highs and lows. The biggest market boost coming from President Trump’s landslide win to the White House. While the official inauguration isn’t until 20 January 2025, the effects are already being felt, creating a strong possibility for a Santa Rally to close out the year.
- Tech resurgence
- A cooling global economy
- Seasonal trends still hold strong
Have you been naughty OR nice?
Whether you’ve been playing it cool or making some bold moves this year, your portfolio’s performance might just need that extra sizzle ahead of 2025. Here are some stock picks recommended by our research team to spice things up!
To make the most of the Santa Rally, here are some pro tips to help you stay on track:
- Stick to quality stocks: Look for companies with strong fundamentals, which are undervalued and have shown resilience this year, like technology and healthcare.
- Consider ETFs: ETFs like the Vanguard S&P 500 (VOO), S&P 500 (SPY) or Nasdaq 100 (QQQ) can give exposure to the rally without the risks of individual stocks.
- Save the date: Know when the Santa Rally kicks off to time your entries and exits, helping you maximize returns.
- Stay realistic: While the Santa Rally is a fun, seasonal trend, it’s not guaranteed. Avoid going all-in on speculative bets and trade within your means.
So whether 2024 brings a jolly year-end boost or not, it’s good to remember that the Santa Rally – a market tradition – reflects the holiday cheer that fuels investor optimism. The outcome depends on economic conditions, geopolitical factors, and staying informed and strategic will help you make the most of it!
Sign up for a Rakuten Trade account via iMoney now and get RM50 TnG eWallet credit! Complete your first trade on any market and be rewarded with 1 Grab share—the offer ends on 20 January 2025!*
