Thanksgiving to Santa Claus Rally Trade │ Jeff Hirsch

Thanksgiving [Thursday, November 28] kicks off a run of solid bullish seasonal patterns. November-January is the year’s best consecutive 3-month span (2025 STA p. 149). Then there’s the January Effect (2025 STA p. 112 & 114) of small caps outperforming large caps in January, which begins in mid-December.

 » Buy the Tuesday before Thanksgiving and hold until the 2nd trading day of the New Year. «

And of course, the "Santa Claus Rally," (2025 STA p. 118) invented and named by Yale Hirsch in 1972 in the Almanac. Often confused with any Q4 rally, it is defined as the short, sweet rally that covers the last 5 trading days of the year and the first two trading days of the New Year. Yale also coined the phrase: "If Santa Claus should fail to call, bears may come to Broad and Wall."

We have combined these seasonal occurrences into a single trade: Buy the Tuesday before Thanksgiving and hold until the 2nd trading day of the New Year. Since 1950, S&P 500 has been up 79.73% of the time from the Tuesday before Thanksgiving to the 2nd trading day of the year with an average gain of 2.58%. Russell 2000 is up 77.78% of the time since 1979, average gain 3.34%.

Reference:
Jeffrey A. Hirsch (November 20, 2024) - Feast On Small Caps Thanksgiving to Santa Claus Rally Trade.

 

 » From November 5 to December 31, the average return of the S&P 500 has been 2.68%; Nasdaq 100 5.53%, 

and Russell 2000 5.7%. In election years S&P 500 3.38%; Nasdaq 100 0.79%, and Russell 2000 7.94%. «

 Goldman Sachs fund flows guru Scott Rubner, November 6, 2024. See also [HERE].

 

 S&P 500 (daily bars) - Hurst Cycles; Steve Miller, November 21, 2024. See also [HERE].

See also:

Jeffrey A. Hirsch (November 5, 2024) - Bullish Novembers in Election Years Have Weak Seasonal Points.

Jeffrey A. Hirsch (November 6, 2024) - Presidential Election Day to Yearend Historically Bullish.

Jack Gillen (2009) - Year-End Rally, January Effect, and Trend for the Year Ahead.

U.S. Stock Market Seasonality of the Week Before Thanksgiving │ Jeff Hirsch

DJIA has a fair track record over the last 31 years, rising 20 times the week before Thanksgiving (November 18-22) with an average gain of 0.44% in all years. But the other major U.S. stock market benchmarks are not as strong and there has been more weakness the past seven years. Since 2017, DJIA has advanced just once during the week before Thanksgiving.

Week Before Thanksgiving: DJIA Up 20 of 31, but Down in 6 of the Last 7.

 

Over the last 31 years, S&P 500 and NASDAQ have the same record, up 18 times, with similar average gains of 0.20% and 0.23% respectively. Russell 2000 has been the weakest, up 16 times with an average gain of 0.08%. Last year, the week before Thanksgiving, enjoyed solid across-the-board gains as the market recovered from a correction.

Should weakness materialize next week, it may be a solid set up for the Thanksgiving trade of buying into weakness the week before Thanksgiving and selling into strength around the holiday and/or during typical November end-of-month strength.

Quoted from:
Jeffrey A. Hirsch (November 15, 2024) - Week before Thanksgiving DJIA Up 20 of 31, But Down 6 of last 7. 

 

See also:
Jeffrey A. Hirsch (November 5, 2024) - Bullish Novembers in Election Years Have Weak Seasonal Points.
Jeffrey A. Hirsch (November 6, 2024) - Presidential Election Day to Yearend Historically Bullish.