Santa RallyDecember is also noteworthy for the “Santa Claus” rally that begins Christmas Eve and lasts through the second trading day of the new year. During this period, the average gain for the S&P 500 since 1969 is 1.5%. Perhaps more importantly, this period is the first indicator of what may be in store for 2015. According to Hirsch's analysis, the last four times the Santa Claus rally didn’t happen the following year was flat twice (1994 and 2004) and very poor twice (2000 and 2008). The roughly 38% drop in oil prices in recent months will benefit consumers and others such as airlines and cruise lines.
In my opinion, the drop is supply driven. That is, it doesn’t stem from a drop in demand, which is important for several reasons.