Is Santa Coming to Wall Street or Are Big Losses for Stocks on the Way?
The stock market is in an interesting place right now. It has risen to a level that I would call a crossroads. From here, the market could really explode and go much higher, or this might mark a stopping place for this bull market.
So, there are some interesting cross currents here. First of all, from a seasonal standpoint, we are entering into a bullish time of the year. Wall Street is gearing up for the famed Santa Claus Rally. This is the week between Christmas and the New Year plus the first two market days of January. There is an old saying on Wall Street,
“If Santa should fail to call, bears may come to broad and wall.” (The New York Stock Exchange is located at the corner of Broad Street and Wall Street.)
Said another way, it is historically a bad sign for stocks for the upcoming year if there is not a year-end stock market rally during that 7 day period. Then, if the market does rally, Wall Street also looks toward January. A positive January, referred to as the January Effect, is a positive sign that 2020 will be a good year for stocks. A negative January does not bode well for 2020 (according to history).
The bull market will turn 11 years of age March 2020. Bull markets only go for so long. They eventually turn into bear markets. Now is not the time to get complacent. Having said that, everyone seems to think that this market will knock the lights out again in 2020. There is an old saying on Wall Street. “When everyone thinks the same way, everyone is usually wrong.”
One thing for sure, 2020 will be an interesting year especially considering it is an election year!