You might remember the old stock market adage ‘Sell in May and go away’. The period of November to May typically represents the best six months in the stock market. December and January have traditionally been strong months for the market.
One explanation could be the January effect. In December, many large institutions sell in December for end-of-year tax purposes as well as to balance their annualized returns.
This means that the Santa Claus rally could just be anticipation for the January effect.