History On Our Side
Recently, I’ve talked a lot about how the stock market does this time of year.
Which is kind of a weird concept on its own, right?
Just because something happened a few times in the past doesn’t mean it’s going to happen again right now, right?
Yes and no.
While I am not one of the “all in” types when it comes to seasonal tendencies, I do believe there are certain historic precedents that matter and should weigh into our decision making process.
Take, for example, the “election year” tendency.
Did you know that the stock market usually does well in election years?
Here are some statistics going back to 1928:
Well, look at that.
The market is up nicely in election years going back nearly a century!
That doesn’t take into account 2020 or 2024… Both were positive.
The seasonal tendency played out very well and for those of you who followed me being ultra bullish, I hope it rewarded you in a big way!
Which leads us to right now.
This is the time of year where traders like to talk about the “Santa Claus Rally”.
What is the Santa Claus Rally? It’s simply the seven-day period from December 26 to January 2.
How has it done?
Since 1950, the S&P 500 has had gains 78% of the time. Santa Claus wins almost 80% of the time.
And how much has it made?
The S&P 500 has averaged a gain of 1.3% over the seven-day period since 1950. Santa Claus makes over 1% in just a week.
Which is great! Given the nature of the market (around 7-10% a year positive expectancy) any time you average out to a 1% gain in 4-5 days of market action, that’s quite positive.
But could we do even better?
Yes, and that’s why we love options. All of my strategies are positioned to take advantage if we get the continued “melt up” through the new year and I especially love the “Overnight Options” method here.
Why?
Because with a bullish tendency (seasonally speaking) combined with the fact that the market usually moves more overnight, we’re able to tap into that advantage with a simple play that really inflates our upside potential.
So if you’re like me and you still think there is some juice to squeeze in 2024…
It could be a great time to use strategies like Overnight Options to target trades just about every day at this special time of the year.
Talk Soon,
Nate Tucci
