Treasure Chest | Dec 11 2013
By Greg Peel
There is every reason why not to expect a so-called “Santa Rally” in 2013. (Note that originally the Santa Rally occurred only between Christmas and New Year, but seems to now have been extended to encompass most of December.) The past three late-year rallies have begun at market lows post some third quarter macro confidence shatterer, usually related to Europe but in 2011 related to the US credit rating downgrade, and followed by, respectively, QE2, QE2.5 and QE3.
This year not only has there been no September quarter shake-out, the threat heading into year-end is QE-minus. The market has posted a very strong eleven months and the twelve is time to lock in those profits before starting with a fresh slate in 2014.
But do not fear, suggests much-feted Goldman Sachs market watcher Richard Coppleson. Santa’s just changing the oil. We are close to seeing the Australian market in its strongest trading period of the year. One needs to go back a bit further than the post-GFC period.
The Australian market has been up at this time of year 27 of the last 33 years (more than 80%). “This time of the year” in 2013 begins (“officially”, Coppleson contends) on Monday, December 16, and ends on Wednesday, January 8.
The average gain over this mid-December-early-January run in 33 years is 2.93%, but 30% of the time the gain was 6% or more. In the last 18 years the market has rallied 16 times, with an average gain of 3.7%.
So deck the halls, hang out the mistletoe and try to forget what happened in six of those years.
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