Eight days of Christmas

  • Stocks have often rallied in the days before and after Christmas
  • Returns in a specific eight-day window are more than four times average
  • Most historically bullish day may surprise you

If history is any guide, stock traders who take off early for the holidays may miss out on what is often a more-bullish-than-average stretch of the calendar.

The following chart shows that, starting from the third day before Christmas (that would be today) to the fifth day after it, the S&P 500 (SPX) has typically gained much more than it usually does during an average eight-day period:

Chart 1: S&P 500 returns around Christmas, 1960–2019. Santa Clause rally.

Source (data): Standard & Poor's

The SPX’s average return in this eight-day window (1.1%) was more than four times its overall average for eight-day periods (0.25%). Also, while the SPX’s overall odds of gaining ground in a given eight-day period are around 58%, the index had a positive return in 68% of these eight-day periods surrounding Christmas. Those numbers suggest the proverbial “Santa Claus rally” may be a little more than proverbial, even if the sleigh doesn’t necessarily make a stop every year.

Of course, over time patterns can shift, and over the past 20 years the SPX’s average gain from three days before Christmas to five days after it shrank to 0.9% (which is still well above the long-term average), although the period’s win rate inched higher to 70%.1

One final interesting aspect to this holiday story: The first day after Christmas has been an up day 70% of the time, and it’s also had the highest average return (0.33%) of any of the eight days in this time window.


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1 All statistics reflect S&P 500 (SPX) daily closing prices, Dec. 1960 through Dec. 2019. Supporting document available upon request.

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