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Here Comes Santa Claus Rally

In a century old trend, stocks have performed well in the period that includes the year’s last five trading days and the first two sessions of the new year, in what’s come to be known as the Santa Claus rally. This year, the market’s rally in recent weeks has been exquisite starting from December 21st, with the Dow Jones Industrial Average or the Dow DJIA, +0.37% more than 5% higher than where it started the fourth quarter and the S&P 500 SPX, +0.51% more than 7% higher. Moreover, Europe’s STOXX 600 is also up about 19% and so far hit its peak in more than four years.

The market has been following the trend as far as we can oversee, with the S&P 500 and the Nasdaq both setting record highs on Thursday. Nasdaq topped the 9000 level for the first time as well as the S&P 500 has risen about 29% so far in 2019. That’s the best mark since 2013, when the index gained 29.6%. At the opening trade in Indonesia, IHSG has risen 0.03% to 6,321.57. As of the last session, IHSG was 0.01% to 6,319.85. At the end of second session, the Jakarta Composite Index gained 0.16% to 6,329.31. Stocks that contributed significantly in boosting the IHSG’s performance included: PT Unilever Indonesia Tbk / UNVR (+ 0.82%), PT Transcoal Pacific Tbk / TCPI (+ 8.26%), PT Bank Rakyat Indonesia Tbk / BBRI (+ 0.45%), PT Astra International Tbk / ASII (+ 0.73%), and PT Bank Central Asia Tbk / BBCA (+ 0.22%).

Generally, the stock market would have an upward bias immediately after Christmas because one reason, researchers have found, is that short sellers typically cover their shorts before extended holidays. Another is that end-of-year contributions to 401(k)s, IRAs and pension plans lead to new money being invested in the stock market. Seems like the market is presumably in a remarkable condition after all by acknowledging most giant stock markets in the world are gaining in the Santa Claus Rally. For the rest of us, if investing new money, you might want to do so before Christmas, in order to get in before the market rallies. And if you’re pulling money out, you might want to wait until after the first few trading days of 2020.



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