Where’s the Santa rally?

December has traditionally been favourable for equities in both good and bad years – a phenomenon known as the “December effect” or the “Santa Claus effect”.

There are a number of theories behind this. In part, tax considerations are to blame, as traders delay selling winners in order to delay capital gains taxes for another year. Plus, traders are buying in anticipation of the January effect, which sees an injection of funds into the market.

So far this year, there’s been no sign of the Santa rally … but there are still 12 shopping days left till Christmas for those interested in buying shares.

While the Santa effect may be of interest to you if you’re looking to buy into equities … what about us traders who are looking at technical analysis and reliable patterns that we can profit from?

For us, December can be a tough month.

As trading volumes thin out over the holiday period, ‘reliability’ according to the rules of our trading strategies often falls by the wayside.

Big City traders click on their skis in Courcheval, while, for those of us left behind, it gets harder and harder to find buyers and sellers in the marketplace.

The result can be some pretty wild swings. For that reason, if you’re in the markets over Christmas, be thinking … protection, protection, protection … Keep reading >

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