A Santa Claus rally is a rise in stock prices in the month of December, generally seen over the final week of trading prior to the new year. The rally is generally attributed to anticipation of the January effect, an injection of additional funds into the market, and to additional trades which must, for accounting and tax reasons, be completed by the end of the year. Another reason for the rally may be fund managers "window dressing" their holdings with stocks that have performed well. The Santa Claus rally is also known as the "December Effect."
First recorded by Yale Hirsch in his Stock Traders Almanac.
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