The so-called "Santa Claus rally" may come later this year than in previous years, but it's better late than never. A group of strategists from Ned Davis Research (NDR) pointed out that the performance of US stocks has been relatively lackluster before the official start of the "Santa Claus rally," which has made some investors uneasy.

However, Historical Data shows that even if the rally does not start as expected, investors still have a chance to see a compensatory strong surge. According to the NDR team’s analysis, when the stock market performs poorly in the days leading up to Christmas, it often achieves a significant rebound within five trading days after the holiday.

NDR Analyst London Stockton mentioned in a report on Monday: "Although there are only two days left until Christmas and the S&P 500 Index has fallen 2%, historically, this situation tends to bring an average ROI of 2% in the following five days. In 17 similar cases, the market performed strongly afterward."

According to FactSet data, since December 17, the S&P 500 Index has fallen nearly 2%. This decline mainly occurred after Federal Reserve Chairman Powell's press conference on December 18. Although the Fed announced interest rate cuts, Powell hinted that the pace of rate reductions would slow in 2025, which dampened investor sentiment.

Typically, the so-called "Santa Claus rally" includes the last five trading days of the year and the first two trading days of the new year. This year, that period should begin on Tuesday (December 26) and last until January 3, 2025.

According to Dow Jones market data statistics, since 1950, the average increase for the S&P 500 Index during this period has been 1.3%, with an increase probability of 77%.

In addition to seasonal factors, NDR also pointed out Other possible reasons that may drive the market to rebound before the New Year.

Firstly, according to multiple Indicators maintained by NDR, the US market has entered a short-term oversold Range. Secondly, due to the weak performance of the stock market since early December, investor sentiment indicators show a significant decrease in optimism. This may imply that more funds are on the sidelines, and once the market improves, these funds could quickly flow in to push the stock market higher.

Even if the year-end market fails to materialize, investors still achieved significant returns in 2024. As of noon this Monday, the S&P 500 Index has risen more than 24% this year.

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