December is historically one of the best months of the year for the SPDR S&P 500 ETF Trust SPY. However, most of those historical gains have come in the second half of the month in a seasonal trade known as the Santa Claus Rally.
Unfortunately, Santa Claus hasn’t shown up on Wall Street so far in 2022. The S&P 500 is now down 6.1% in December, but LPL Financial Chief Global Strategist Quincy Krosby said Wednesday that a strong start to Wednesday’s trading session for both Apple, Inc. AAPL and Tesla Inc TSLA could trigger a Santa Claus rally in the market.
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What Is The Santa Claus Rally? The official period of the Santa Claus Rally is the final five trading days of December and the first two trading days of January. This year, the Santa Claus Rally period began on Friday, Dec. 23.
The S&P 500 has traded higher during this seven-day stretch in 77.9% of years. In addition, the S&P 500 has averaged a 1.33% gain during this period, making it the second-best seven-day stretch of the year for stocks, according to LPL Financial.
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Why Tesla And Apple Matter: Tesla shares jumped more than 2.2% on Wednesday morning, while Apple gained 0.5%. Krosby said the fact both Tesla and Apple are finally finding some buyers after a brutal year could be a good sign for the market.
“This morning, the futures market is in the green, and both Apple and Tesla are positive in the pre-market,” Krosby said.
“In fact, this could be the spark the market has been waiting for after an arduous December.”
Krosby said the S&P 500 has historically generated a return of between 1.3% and 1.8% nearly 80% of the time during the Santa Claus rally period since 1950.
Benzinga’s Take: Apple shares are down 28.2% year-to-date, while Tesla shares have plummeted 71.3% this year. While Wednesday morning’s strong start is encouraging, Tesla may continue to endure selling pressure from tax loss harvesters through the end of the week.
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