The Auld Lang Syne hangover effect

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At this time of year, you hear a lot about the Santa Claus rally.

The idea is that in the week between Christmas and New Year, the markets usually rally… big time.

And over the course of years, this has proven true time and time again.

Of course, it’s not 100% (nothing in the market ever is), but it’s usually pretty predictable.

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But I noticed something interesting when I caught a seasonality chart in an article today:

That’s what I’m gonna call the Auld Lang Syne hangover effect!

This chart shows us how seasonally, we usually ride the “Santa rally” through the first week of January…

Then: watch out, volatility!

Somewhere around about January 7th (give or take), the Christmas momentum ebbs away and we start to get volatility again.

Remember, volatility doesn’t mean we plummet straight down.

It just means that there’s more uncertainty introduced into the market, and there is some correction from relentless bullish rallies.

Considering that we’ve seen six days of Dow Jones gains in a row, despite fears over omicron… we might be due for a bit of a correction.

So it will be interesting to see if this pattern repeats itself.

You know me: these meta trends never make that much of a difference in my trading.

I’m still reading the charts, focusing on my technicals, and going from there.

But they’re interesting to talk about, and maybe most important because they give you insight into how other traders think.

Everything’s very merry right now, but about a week after New Year’s Day, just about when folks are starting to break those resolutions…

Look out. Because volatility could come back in a big way!

Hope you learned a bit from this,

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Jeffry Turnmire and InvestPub do not provide investment advice. Trading involves a substantial risk of loss and is not suitable for all investors. Many traders fail and you should not trade with money you cannot afford to lose. If you need personal financial advice, consult a financial advisor.

The Auld Lang Syne hangover effect

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