Just feel free to put down any share/shares you feel will do well in 2015 and future years.

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Robbie Burns’ Trading Diary – Time for the Santa Rally?

By Robbie Burns 14 December 2015



It can’t be can it? Is it really nearly Christmas again?

Frankly I feel Scrooge-like about it. Bah humbug! I hate the cold, the dark and all that. And those annoying TV ads. And… look you don’t want me spoiling it for you; I’m off to Dubai for some lazing around in the sun. Now that’s more like it.

But Christmas is handy, as marketwise there is usually money to be made. Yes it is the “Santa Rally”. Loved by all of us traders (and journalists who can fill space by repeating what they wrote about the Santa Rally last year – done in a minute, off to the pub). So I am off to the pub in about 60 seconds.

Yes, for some unknown reason it’s well known that December is one of the best months for share performance.

Most years, while it’s cold outside, December is hot! The statistics support my argument: historically the strongest week of the year for the market is the 51st week. And the second strongest? The 52nd!

The probability of positive returns in December is a high 69%. The market’s only had one significant fall in December since 1981. Both mid- and large-cap stocks perform equally well. Since 1984, when the FTSE was created, the index has increased on average by 2.3% in December. The market has only fallen five times in all those years.

Why are the markets so good at the most wonderful time of the year? I suspect it is down to something as simple as human psychology.

We all feel good with the approach of Christmas, then there are New Year’s hopes and dreams. And probably funds want to end the year on a good note. But by the end of January we tend to be left with a bit of a hangover and that’s why February isn’t so good. There is also some anecdotal evidence that certain persons push up markets to make their performances look better. That’s what someone down the pub told me anyhow.

Also, as markets often fall somewhat in October and November, investors begin to come in now and buy what they perceive as bargains.

The period between Christmas and New Year often sees stocks squeezing higher on thin volumes. Many stocks race higher during the holidays; there is frequently no one selling and institutions are shut. This often has a good effect on stocks at the smaller end of the market.

Of course, I am making it all sound too easy… it’s never going to work out every year. But the use of tight stop losses should ensure that when you meet a year without a Santa bump, your losses will be minimal.

The best way of playing it is a FTSE or Dow long spreadbet – just a rolling one, as we’re only looking short-term.

A trailing stop loss of say 100 points (to ensure no sudden spike out) might work out.

First (and I do this most years): I buy the FTSE 100 index in early/mid-December and I sell in early January to take advantage of the fact that the FTSE usually rises in this period.

I usually just make a simple ‘long’ FTSE 100 spread bet, with the stop loss in place just in case it’s the occasional year when the festive uplift doesn’t happen. Might even be worth having a guaranteed stop in case something bad happens when you least expect it. Remember the FTSE trades 24 hours Mon-Fri up to 9pm(ish) Fri and then from 11pm Sundays. IG even does a Sunday index spread too.

There are also ETFs like LUK2 which go up if the FTSE goes up and you can use those in an ISA tax free, though unlike spreadbets it is only open market hours.

Let’s have a look at the last couple of years. In 2013 when I bought just before Christmas at 6,445 and the market had a lovely festive rally and in January went to near 6,800 for a tremendous profit!

Last year (2014) the best time to buy was around mid December and then bank gains near the end of the year. So say you’d bought the FTSE around December 14th and sold just after the Xmas bash around the 28th-30th you could have banked more than 400 points as the FTSE rose from under 6,200 to over 6,800.

But do remember: the market can never be totally predicted so beware, maybe this is the year it won’t happen.

I find December is also a good time to have a look at some of the smaller stocks in the market and sometimes have a bit of a gamble on a few stocking-filler shares. But only a little gamble, mind. Let’s not be idiots.

Looking at specific days, would you believe it the short half day on Christmas Eve is the strongest market day of the year, with the 23rd being the strongest day.

But watch out, the first week in January is the weakest market week. (You can imagine this is when people look at their credit card spending in December and it reality hits.) At the beginning of this year the market indeed fell the first few days, though it did OK after that.

On the downside, one thing to watch out for is companies sneaking out bad news between Christmas and New Year. It’s the same as political parties burying bad news on a day when a big story emerges elsewhere.

With so many people away, the companies hope the stinker will go unnoticed. So it’s worth keeping an eye on news that’s related to your stocks.

I get out quick if any kind of bad company news is released on one of my shares at this time.

So, to sum up… long the FTSE usually works from mid-December but by the time we hit January a switch to a short might pay.

If you’re going to play the Christmas game, good luck, but remember markets sometimes don’t do what is expected, so beware! Anyway if you lose I’ll be hard to find… look for a very luxurious hotel somewhere in Dubai!

Tue, Dec 15, 2015, 2:05 PM EST - U.S. Markets close in 1 hr 55 mins
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Wall Street guru Jeff Saut says stocks are set up for a 'rip-your-face-off' rally

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Business Insider
By Akin Oyedele
1 hour ago


(CNBC)
Jeffrey Saut

Stocks are set up for a 'Santa Claus' rally to all-time highs by the end of 2015.

That's the bullish call from Raymond James' Jeffrey Saut, as stocks rally for a second day in a row, and the S&P 500 crawls out of negative year-to-date territory.

"I think the market has the potential here for a rip-your-face-off type rally," he told CNBC on Tuesday morning. "It's human nature to read into negativity what happened last Friday, but it really doesn't deconstruct the bullish case right here."

Saut listed three things that inform his conviction:
•There are "massively oversold conditions" in the stock market.
•The upcoming expiration on December stock options, worth over a trillion dollars, has everyone worried. However, Saut says this typically has a bullish tilt.
•We're approaching the so-called Santa Claus-rally, the period between Christmas and New Year's Eve when, historically, stocks tend to rally.
•As for the big news of the week — the FOMC's interest-rate decision tomorrow — Saut doesn't think it's bad news for stocks. He says markets will not be spooked after an expected rate hike on Wednesday because Yellen will reassure everyone that the pace of future increases would be gradual, and that the Fed would take the first few months of the new year to assess the impact of a hike on markets before moving again.

All this should push the S&P 500 above its all-time high of 2,134.72 reached on May 20, Saut says. On Tuesday, the index opened at 2,047, and would need to rally 4% in the 11 trading days left for 2015.

Saut is also not spooked by the decline in crude oil prices. He says oil started a bottoming process at about $42 per barrel in February, despite prices falling to seven-year lows and below $35 per barrel yesterday.

And energy companies would easily be able to clear the bar to report year-on-year growth in the new year because of the sharp declines this year.

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More likely crap caps.. if you don't mind me saying -):

I don't mind,

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DC - Had a message from doodlebug on ADVFN, want's to know if you would like to join CAT on his free Slack Forum? DB can't email you direct he's banned from MAM as you know.

Cheers Chris

Cheers Chris . Am I right in thinking he can read MAM but not contribute? Happy Christmas doodlebug and hope you are keeping well. Sadly ADVFN is not for me. Will be good to see you back on here, perhaps one day ? :-))

Correct dc

dc - me neither that is why joined the above.

Cheers Chris and dood. :-))

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