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The Real Reason Behind The Santa Rally
Everyobody knows that the Santa Claus rally which traditionally caps every calendar year, has a twofold role: one is to window dress the portfolios of underperforming (which these days means almost all) asset managers who get a 4-5% pick up in "value" not due to their asset selection skills, but because everyone rushes in at the end of the year in a mass buying orgy, thereby making returns seems higher than they normally would be; the second - and more important - is to boost consumer confidence and to encourage that all important American instinct - spending money one does not have to purchase things one does not need, an instinct that kicks in far more easily when one sees the Dow Jones rising every single day heading into the holiday weekend.
But while this is intuitive for most, there actually is a scientific explanation why it has to happen ever year.
According to Evercore ISI "over the past 20 years, there's been an 87% correlation between S&P performance in 4Q and Holiday Sales." As of right now, the S&P in Dec is now on track to be up - a few days ago it wasn't. Furthermore, the S&P is now up +5.5% above its Sep average. If it holds there, the 20-year regression line below suggests that Holiday Sales will be up +5.4%...
Chart: Evercore ISI
... which is clearly better than just a 2.5% increase, one which would lead to even further reductions in Q4 GDP and concerns the Fed will have to end its rate hikes and go back to ZIRP.
It also means that the rally of the last three days which pushed the S&P higher by 3%, and back to green for the year, was the cheapest and most efficient way to boost retail sales, which feed directly into GDP, by virtually the same amount, and which in turn will be spun by the CNBC's of the world as bullish for stocks, thus closing the feedback loop.
Reflexivity: because it 100% of the time it works every time.
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I can see it, but understanding it...well........
Investors pull most money from US mutual funds in 2 years
http://www.msn.com/en-us/money/savingandinvesting/investors-pull-most-money-from-us-mutual-funds-in-2-years/ar-BBnRri2?li=BBnb7Kv
That must explain why the market keeps levitating
Wrong.
The reason for the Christmas rally and all those that have preceded it since 2008?
The Plunge Protection Team, the lawless Tresaury Department, the banksters and the deep state.
Soon this will end.
Have a hard time understanding how a stock market rally, when I don't have a dime invested in it, would make me want to run out to the mall and blow some cash.
Correlation should not be confused with causation.
The correlation of confusion is the causation.
Lack of coal for stockings since all of the mine shut-downs.
Retail is bleeding right now here in Europe.
Just alone fashion is down over 20% due to the way above normal hot weather and entire wintercollections are still on the shelf.
Electronics is also bleeding because of cheap chinese ecom sites that are booming right now.
Reflexivity: because it 100% of the time it works every time.
???
Nice chart but they should show the regression line if you exclude 2008.
And the Santa rally algo has been unleased for the last hour of trading today. Damn near straight up to unchanged for the day.
Merry effing Christmas, Wall Street.
Good lord! I called the top on that rally. Some serious profit taking in the last 15 minutes.
Lesson learned. I vow to never again comment on stock prices while the market is open.
Now as for gold, any body else hear the waterfall that is coming next week? You could throw a ten dollar bill over the trading range for the last 4 days. Always a bad sign.
One can only hope. I've been short miner's for longer than can make one merry.
"...and more important - is to boost consumer confidence and to encourage that all important American instinct - spending money one does not have to purchase things one does not need, an instinct that kicks in far more easily when one sees the Dow Jones rising every single day heading into the holiday weekend."
The author makes a good observation here, as 'consumer spending' and the 'confidence' that underpins said consumerism is in fact, directly correlated with the positive 'sentiment' that a rising market gives, and the all-around feeling of economic 'security' - that everything is 'Ok', hence they not be as worried about eating pork & beans under a bridge in 6 months, so $blow it out the cannon today - because, 'every little thing, is gonna be alright'...
It also means that the rally of the last three days which pushed the S&P higher by 3%, and back to green for the year, was the cheapest and most efficient way to boost retail sales...
sarcasm?
Retail sales are in the shitter...
The only assclowns buying stocks are the few dipshit macros playing algo PONG with each other. Look at volume.[barf barf]
Happy Holidays, as is said in post Christian USSA.
Yes, Virginia, the Jews Stole Christmas Kevin MacDonald PhD
Originally posted in 2012, this article gets at the Jewish ethnic angle behind the “War on Christmas.”
"Bad Santa" and Eli Plaut's "A Kosher Christmas" by Kevin MacDonald
[This article was originally posted on Dec. 24, 2013; it is a comment on an article that appeared inTableton Dec. 17, 2013.Tablethas seen fit to repost it in 2014, on Christmas eve, so I thought I would repost my comment.]
Merry Christmas . . . NOT! Part 1 by Edmund Connelly
Merry Christmas Movies . . . NOT! Part 2 — Anti-Christmas Movies
Goddamn dude, your working knowledge of correlation and causation (and statistical inference) is pathetic. You've officially jumped the shark.