Disliked{quote} pat i know youre not a beginner but ill offer you constructive advise since you asked the room to do so in an earlier post Thought process on GU set up for FOMC Just sharing my thoughts as a beginner, not a trading signal. Coz I always got it wrong most of the time. I'm still learning, so please feel free to offer constructive criticism to help me improve. the santa claus rally doesnt happen this soon in the month Dubbed a Santa Claus rally, this phenomenon describes a tendency for the stock market to go up by 1% to 2% over the period...Ignored
- "Institutional investors/traders tend to be on vacation during the last week of December, resulting in retail investors driving the stock market, of whom tend to generally be more bullish.
- Investors/trading purchasing in anticipation of the January Effect, which is a hypothesis that there is a seasonal anomaly causing stock prices to increase in the month of January more than in any other month.
- A slowdown in tax-loss harvesting, which has a deadline of December 31.
- Optimism over a coming new year.
- Holiday spending."
The 'santa claus rally' (nonsense) can happen this early in the year, if the market chooses to rally, hindsight explainers like Forbes will be sure to assign it to any fundamental factor they can. Even though the santa claus rally isn't really a fundamental factor at all, more the subsequent outcome of positioning if anything. There is no meaningful evidence that suggests the santa rally effect cannot happen in early December or even late November.
You say its retail driving up price, you will never have any way of knowing who is driving up price as an individual trader, so why even try to guess who is? It's irrelevant, if the price goes up, then its goes up. Retail trader or not, supply and demand factors don't care about your trading role...
If the FED happens to be dovish this FOMC meeting and the stock market pumps, it will be called a 'santa rally' even though its an irrelevant event and caused by other factors. Try to find out what's actually driving the correlation, rather than the name of it.
Ultimately you cannot say the santa rally does not happen this early in the month with conviction, you do not know such a thing! Price is likely to retrace no matter what caused the move or if retail traders were involved or not, this is how a fair market operates.