Why You Should Watch The Santa Claus Rally

The thing about the Santa Claus rally is that people often use it improperly, according to “The Stock Trader’s Almanac” Editor-in-Chief Jeffrey Hirsch.

Hirsch has been the editor-in-chief since he took the role over from his father, Yale Hirsch, who started the almanac in the 1960s. He recently joined Benzinga’s #PreMarket Prep to talk about what seasonal trends he’ll be watching through the rest of the year.

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The Santa Claus rally is the last five days of the year plus the first two of the next year, Hirsch explained.

“It’s a short thing: a period of time that’s just got a bullish bias -- not excessively. It’s about a 1.5 percent gain,” he said.

The importance of this seasonal trend is that if it doesn’t happen, Hirsch said, then something is awry.

“There’s a phrase that my father came up with: ‘If Santa Claus should fail to call, the bears may come to Broad and Wall,'” he said.

“We’ve seen that the last four times, either a flat year or a nasty bear market.”

Sentiment Is Slowly Shifting http://t.co/kCTc4whjld

— StockTrader'sAlmanac (@AlmanacTrader) October 31, 2014

Hirsch also talked about other trends to watch throughout the end of the year.

Check out his full interview here:

Don’t forget to tune in to Benzinga’s #PreMarket Prep broadcast Monday-Friday 8-9:45 a.m. ET for a live, interactive morning show with veteran traders and featured finance industry experts ready to answer your questions for the trading day.

Image credit: Andy Mangold, Flickr