Is the Santa Claus Rally Real? Every One Since 1950, Tested

Every December, someone on financial TV brings up the Santa Claus rally.

The name comes from Yale Hirsch, who wrote it into the Stock Trader's Almanac in 1972. His definition is precise: the last five trading days of December plus the first two of January. Seven trading days in all.

So we measured every one. We used the S&P 500's daily closes from Yahoo Finance, from December 1950 to January 2026. That's 76 rallies. Then we ran the test most Santa tables skip: could luck alone produce a week this good?

Finding 1: the rally is real

Across those 76 years the S&P 500 rose 58 times, about 76% of the time. The median gain was +1.21% in seven trading days.

Compare that with every other 7-day window since 1950. There are 19,079 of them. 58% rose, and the median one gained +0.40%. So the rally is up more often, and by about three times as much.

Could that be luck? We filled 76 slots with random 7-day windows, 20,000 times. Only 0.06% of the draws had 58 or more winners.

The best one was 2008-09, at +7.4%, right after the 2008 crash. The worst was 1999-00, at −4.0%, just before the dot-com bust.

Finding 2: it's the best week of the year

Here's the harder test. A random week isn't the right comparison, because people go looking for the best week after the fact. With a whole calendar to choose from, one week will look good by chance.

So we cut every year from 1951 to 2025 into back-to-back 7-day stretches, counting back from the rally. That gives 32 stretches, from mid-February to New Year, each with 75 years of history.

The rally came first. It rose in 57 of 75 years. The next best stretch, starting around 7 Jul, rose in 52.

Then we dealt all those weekly changes at random into 32 fake weeks, 20,000 times. The best fake week did as well as the rally in only 3.0% of the shuffles.

That's the opposite of what we found for bitcoin's "Uptober". There, the luckiest random month matched October 99.8% of the time. October's record was what luck looks like. The Santa Claus rally's isn't.

Nobody knows for sure why it happens. The usual explanations are holiday optimism, light trading with many big investors away, year-end bonuses being invested, and selling for tax reasons finishing before Christmas. None of them has been proven.

Finding 3: it's fading

Split the record in half and it changes. From 1950 to 1987 the rally rose in 31 of 38 years, with a median of +1.71%. From 1988 to 2025 it rose in 27 of 38, with a median of +0.86%. The typical gain has halved.

Then came three misses in a row: −0.88% in 2023-24, −0.53% in 2024-25 and −0.11% in 2025-26. Before that, it had never missed more than two years running since 1950.

This is what usually happens to a famous calendar pattern. Once enough traders know about it, they buy earlier to get ahead of it, and the gain spreads out or disappears. Three misses don't prove it's gone. They do mean you can't count on it.

Finding 4: the warning is weak

The Almanac comes with a rhyme: "If Santa Claus should fail to call, bears may come to Broad and Wall." Broad and Wall is the corner of the New York Stock Exchange. The idea is that a missed rally warns of a bad year ahead.

The rally missed 18 times. For 17 of those, we know how the next year went. The S&P 500 fell in 5 of them, with a median change of +7.1%. After the 58 rallies that did show up, the next year fell 14 times, with a median of +12.6%.

So the years after a miss were a bit weaker, but most of them still went up. The rhyme survives on two famous misses. The 1999-00 rally fell before a year that lost −10.1%. The 2007-08 rally fell before 2008, which lost −38.5%.

The last three misses didn't fit at all. The year after the 2023-24 miss rose +23.3%. The year after 2024-25 rose +16.4%. And after the 2025-26 miss, the S&P 500 was up +12.8% in 2026 by 29 October.

Finding 5: you can't live on it

Say you owned the S&P 500 only during the Santa Claus rally, every year from 1950 to 2025, and held cash the rest of the time. $100 would have become about $252.

Holding the S&P 500 the whole time turned $100 into about $38,600, before dividends. The rally is a real edge, but it's seven days a year. The other 245 or so trading days did almost all the work.

How to read it

• Ask whether a random week could have done as well. Most calendar patterns fail that test. This one passes it.
• Look at the size, not just the count. A median gain of +1.21% is real money for a trader, but it's one bad headline away from a loss.
• Check the recent years. A pattern that worked best in the 1950s-1980s may not be the pattern you're trading now.
• Don't read a missed rally as a sell signal. Most years after a miss still went up.
• If you invest for the long run, ignore it. Missing the rest of the year costs far more than the rally ever paid.

Method, and what this cannot tell you

We took every daily close of the S&P 500 from Yahoo Finance, from December 1949 to 29 October 2026. For each December from 1950 to 2025 we measured the Santa Claus rally the way the Stock Trader's Almanac defines it: the last five trading days of December plus the first two of January, from the close before the first day to the close of the seventh. That's 76 rallies. Then we ran two controls. First, we filled 76 slots with random 7-day windows from the same years, 20,000 times. Second, we cut every year from 1951 to 2025 into back-to-back 7-day stretches, dealt them all at random into 32 fake stretches, 20,000 times, and counted how often the best fake one looked as good as the real rally.

• These are price changes. Dividends would add a little to every window, the rally and the others alike, so they don't change the comparison.
• Seventy-six rallies is a decent sample for a calendar effect, but each one is only seven days long. A single bad headline can decide a year.
• The calendar control covers the 32 stretches every year has in full, from mid-February to New Year. The first six weeks of January are left out.
• The calendar test asks whether luck could produce a stretch this good. It says luck rarely does. It doesn't say why the rally happens, or that it will keep happening.
• The cross-check is short. FRED's S&P 500 series starts in 2016, and it agrees with Yahoo on all ten rallies since then.
• A famous calendar effect gets traded. That can make it fade, and the last 38 years are weaker than the first 38.