The Santa Claus Effect

December and the Santa Claus Effect

Monday marks the point when December really takes hold of the stock market.

The transition between November into December is complete and the movement created by that will be coming to an end.

Historical reasearch shows us that December is a month of profit taking as the market comes out of the Oct/Nov earnings season. That profit taking can last until mid-December.

Once the profit taking finds a floor then you can sometimes see profitable buy points in stocks from mid month into the 3rd or 4th week of December. This upside swing is the Santa Claus effect.

All the parents are out spending money, whether they have or not, just burning up those American Express cards. (good thing they are metal right?)

(Small aside here: that money spent will be reflected in the major credit card companies earnings in Jan/Feb hint hint)

The spending is all about making sure that Santa brings to each boy and girl everything on their Christmas list. We wouldn’t want to disappoint the kids… right?

This is why the market calls this the Santa Claus effect.

Ho Ho Ho $$$Ka ching

The end of Christmas like the 26th -31st can suffer a Christmas hangover (downside weakness)

This year ,with the charts setup for permission of downside movements, the stock market could see a serious hangover (larger longer decline) if the hangover happens.

I have seen years where the December move was flat until December 26th and then shot up.

An example of this would be Christmas 2018, but the chart setup that year was very different from what we have in front of us today.

Understanding these month to month situations are crucial to you becoming a stock market investor that is never suprised and always prepared.

The Jan/Feb earnings that takes place after December is something we will talk about in the next few issues, but it is typcially a great time of the year to make money in the stock market.

This december can be a solid time to do some trading on retail stocks.

AMZN (before the spilt) had a solid trade every year around black friday that you could almost time your watch by.

Those kinds of trades are what I like to do reasearch on and find because there is just something so wholly satisfying about being the guy holding the key to making easy money when everyone esle is out spending themselves silly.

Then if you find youself trades that happen at a particular time every year and you find 12 a year or one every month, then you have a way to always make money.

Pretty soon next Christmas you will be pulling up to the bank to withdraw market money to spend on your Christmas presents, no more budget friendly Christmas for you!

That is what this is all about being the guy or gal that goes from knowing nothing about the stock market and then turning yourself into the investor that has $1.5 million in a checking account, all market profits, just because you can….

Now go out get prepared, take action, analyze, learn, take more action, and build your wealth!

The goal here is for you to learn the edge that you need to begin building your families financial generational wealth change!

Your Friend in Success,

Robert M Morris

*Please note this is not financial advice as I am not a financial advisor and honestly not sure I want to be. Give this information to your own financial advisor before acting on it in your own voliation.