MARKETS SPECTATOR: December gold mine

In the run up to Christmas, the market will be hoping for the traditional Santa Claus rally. Some are even predicting gains of over 10 per cent.

Everyone’s heard of the Santa Claus rally and its knack of returning abnormal gains over a two to three week period leading into Christmas. Looking into this a bit further finds that this Santa Claus rally is merely part of a bigger move.

According to a note released by Goldman Sachs Australia, the fourth quarter has been the strongest quarterly period over the last 20 years, with the market rising 75 per cent of time.

Now, that’s pretty good odds!

Source – Goldman Sachs Australia

On top of that, the average move in the final quarter of the year is a not-too-shabby 2.8 per cent. But wait, there’s more. Of the 15 up years, the average rise has been a massive 6.13 per cent.

"So we are currently in the strongest period, and so far in 2010 the ASX 200 is up 2.7 per cent,” according to Goldman. "We’re thinking that this could be one of those really special ones where we see a 10 per cent… it’s not that uncommon; in the 15 up years it has occurred 33 per cent of the time.”

Given all the uncertainties (Hurricane Sandy, US election, fiscal cliff and eurozone), many participants believe there is no chance of this occurring. Yet history tells us that the market has a knack of doing things when least expected.

At the start of the year, headlines indicated there was no chance of equity market outperformance, yet markets have ‘climbed the wall of worry’ and are up strongly year-to-date.

A lot of participants are very aware of this, finding themselves seriously behind the eight ball in terms of performance. If markets keep moving higher, then we could see a situation where underperforming money is forced to bite the bullet and buy due to the ‘fear of missing out’. This, in turn will drive the market higher!



{{ twilioFailed ? 'SMS Code Failed to Send…' : 'An SMS verification code has been sent ...' }}

Hi {{ user.FirstName }}

Looks like you have already taken a free trial

Please enter your payment details

We have sent you a code via SMS to {{user.DayPhone}}

please enter this code below to complete your SMS verification

We cannot send you a code via SMS to {{user.DayPhone}}

If you didn't receive SMS code please

SMS code cannot be sent due to: {{ twilioStatus }}

Please select one of the options below:

Looks you are already a member. Please enter your password to proceed

Please untick this box when using a public or shared device

Verify your mobile number to proceed...

Please check your mobile number below and press the Send Verification Code button. This will be used to complete your verification in the next step.

Please sign up for full access


Updating information

Please wait ...


{{ productPrice }} / day
( GST included )
Price $0
GST $0
Discount -{{productDiscount}}
TOTAL {{productPrice}}
  • Mastercard
  • Visa

Please click on the ACTIVATE button to finalise your membership


The email address you entered is registered with InvestSMART.

Please login or select "Don't know password"

Please untick this box when using a public or shared device

Register as a new member

(using a different email)

Related Articles