Some of my students asked me about the “Santa Claus Rally”, as they were told by their previous guru and was asked to take full advantage of it.

Well it has been a week since Christmas day and I don’t see any rally at all. Maybe Santa is on leave or maybe he is too busy distributing Christmas gifts to all the children around the world. I think he should get an assistant then he will have time for the rally.

Most investors thinks that the Santa Claus rally is a result of people buying stocks in anticipation of the rise in prices during the month of January, known as the January effect.

Today, things work differently; the stock markets are so unpredictable. It is a reaction of the mass psychology, it only takes one person to sell at market and the price will fall and others will follow.

Telling others to buy in anticipation of the “Santa Claus Rally” is giving them false hope. One should follow their trading plan or system religiously at all time in order to achieve consistent profits and should not listen to any so call expert in the industry. No one can predict the markets.

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