Ride the Christmas Rally to profits
The Christmas rally is a trend traders take advantage of most years. All it is, is the markets tendency to head steadily higher through the month of December. And looking back in history, this rally has held true 80% of the time. That’s right. Over the last ten years, there have only been two Decembers where the markets haven’t gone up; 2007 and 2011. And that’s in a time period with one of the biggest market crashes in recent history.
And that means, if you’re sitting long, you’ll likely make money 80% of the time.
So why would the markets head higher in December?
Well there are a few possible answers to this. And the most likely situation is it’s a combination of these reasons.
First of all, as we head towards the end of the year and into the festive season, people’s pending increases as they buy gifts and pay for holidays. Many people receive their bonuses and this further boosts spending. And this sudden injection of cash sees share prices heading higher.
The next reason is one of a self-fulfilling prophecy. What I mean is, because so many people believe the market will head higher in December, they buy into the market. And the more they buy, the higher share prices move. And so the fact that people believe the share prices will move higher is the reason the share prices will move higher.
The third reason is something a little more controversial…
No fund will officially state this, but there is quite a strong consensus that many fund managers are happy to drive share prices higher in an effort to boost their overall performance. After all, many managers get bonuses linked to their annual performance. So by driving prices a little higher, they could boost their bonuses.
All these reasons come together to see the markets move higher 80% of the time for the month of December.
Stuff your stockings to profit this December!
With the odds in favour of the market going up, you want to make sure you’re sitting long this December.
For my money I believe the best way to play this Christmas Rally is to use geared products like CFDs to magnify your returns over this short period.
By using instruments like CFDs to trade, you can turn a 6% move in a share price into a 60% gain for you. To find out more about how you can lock in these magnified gains and learn how to make money fast from the stock market, my Capital Wave Trader
service could hold the answer for you. Simply click here
for all the details.
Until next time,
Here’s to staying ahead of the game.
This week’s economic calendar: