Santa Claus Rally, December Rally, Trump Rally... what difference does it make... a rally is a rally !!!
Traditionally the Santa Claus Rally in December is believed to result from:
(1) Mutual funds, etc., "dressing up" their portfolio by selling all of their losers and buying winning
stocks that have done well during the year. This way, all stocks in their year-end portfolios look
really good (show gains), even though the fund did not actually participate in these gains. Some
fund's year-end portfolio may show 90% of the stocks up 10-30% in 2016, when in actuality
the fund was actually up only 2-3% for the year. Sounds like "cheating" doesn't it? At its best,
this very misleading.
(2) In the last half of December, the pros have done their dirty deeds and have left on vacation
for the rest of the year. Usually, the market sentiment is high from the runup in the first half
of December. And then, in the last half, the "little guys" come in and push the market even
higher on relatively low volume.
(3) In 2016, all of the above have been aided by the Trump rally.
So, according to the above, December should finish with a nice gain (see graph below).
- all MIPS models went long on 7/11/2016.
- MIPS4 was still long on 11/07/2016 (as was MIPS3, after it got called back to cash for a few days).
We MIPS members will wait for MIPS to tell use what to do next...
Paul Distefano, PhD
CEO / Founder
MIPS Timing Systems, Inc.