Masters in Business At the Money: Seasonality In Stocks
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Dec 20, 2023 Explore the impact of historical patterns and seasonality on equities. Learn about the repetitive market behaviors caused by events like tax payments and regular contributions. Discover the seasonal patterns of the Santa Claus rally and the January effect, as well as the significance of the January barometer. Dive into the seasonality factor in the stock market and the scientific analysis of black box systems. Uncover the historical trends in stock market performance and the market's reaction to presidential election years. Discuss the bullishness of a president running for reelection and the influence of algorithmic trading and AI.
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Mid-month Market Spike Anecdote
- People exhibit consistent monthly investing habits driven by payroll deductions and bill payments.
- This creates notable market inflows mid-month, impacting stock behavior predictably.
Combining Seasonality With Other Factors
- Markets combine seasonality with fundamentals, technicals, and sentiment for patterns to influence outcomes.
- People are creatures of habit, so cycles and routines impact stock market behaviors consistently.
Santa Claus Rally Significance
- The Santa Claus rally occurs in the last 5 trading days of the year plus first two of the new year.
- It's a key indicator: if the market doesn't rally then, it signals potential broader weakness.