Does the Santa Claus Rally Actually Happen, and How Often Do Stocks Rise?

The "Santa Claus rally" is one of the most quoted seasonal patterns on Wall Street. It is easy to test, because it has a fixed calendar window.

What people on X are asking

In November 2025 an options trader asked, "By the official definition of the Santa Claus Rally, when does it start this year?" In January 2026 a market show asked whether the Santa Claus rally delivered and what it signals for January and beyond, and in September 2026 a quant account asked plainly, "Santa Claus Rally: does it really work?" A December 2025 post claimed stocks have a 79% win rate in the window while bitcoin has no seasonal edge. We tested the stock part.

The fact-checked answer

The definition. The window most commonly used is the last five trading days of December plus the first two trading days of January: seven sessions. The return runs from the close just before the window to the close of the second January session. For the coming season, that means from the close on December 23, 2026 to the close on January 5, 2027, assuming the usual holiday closures on December 25 and January 1.

The data. FRED's Nasdaq Composite starts in 1971, so it gives 55 complete windows (1971–72 to 2025–26). FRED's S&P 500 and Dow series cover only the last ten years. We could not test the 79% figure in the post above, which is usually quoted for the S&P 500 over a longer period, but our Nasdaq result (73%) is in the same range.

Santa Claus rally window on the Nasdaq Composite, by decade

UXS calculation from FRED NASDAQCOM daily closes. Best window: 2000–01 (+11.8%); worst: 2007–08 (−3.3%). Price only. Tap a column header to sort.

Seasons starting in	Windows	Up	Average return
1971–1979	9	8	+2.40%
1980–1989	10	8	+1.77%
1990–1999	10	8	+2.25%
2000–2009	10	8	+2.62%
2010–2019	10	7	+0.41%
2020–2025	6	1	−0.65%
All, 1971–2025	55	40 (73%)	+1.60%
Any 7 trading days, 1971–2026	all	59%	+0.33%

What it shows.

• The window has been better than a random week: up 73% of the time against 59%, and about five times the average gain. Over 55 years, that is a real pattern in this data.
• It has faded. The 2010s averaged only +0.4%, and from 2020 the window rose once in six seasons. On the Nasdaq the five seasons from 2021 to 2025 all fell: −0.2%, −0.2%, −2.5%, −0.7% and −0.7%.
• Other indices, ten-year check. S&P 500, 2016–2025: up 7 of 10 times, average +0.48%, against 63% and +0.39% for any seven-day window. Dow: up 9 of 10, average +0.68%. In the S&P the last three windows (2023–2025) were all negative, while the Dow fell only in 2024.

"If Santa fails to call…" A well-known saying claims that a missing Santa rally warns of a weak January or year. On the Nasdaq, Januarys after an up window averaged +3.5% and rose 30 of 40 times; after a down window, they averaged −0.3% and rose 7 of 15 times. That is a difference, but with only 15 down windows it is weak evidence, and recent years broke it: the window fell in 2023–24 and 2024–25, and 2024 and 2025 were still positive years for US stocks.

Why it might happen. Explanations include holiday optimism, lighter trading with many institutional traders away, year-end bonus and pension money going in, and the end of tax-loss selling. Thin volume can make moves larger in either direction.

Should you trade it? Seven sessions of roughly +0.5–1.5% on average, with a one-in-four chance of a loss, is a small edge next to normal volatility, and it has weakened just as it became famous. Seasonal patterns are best used as context, not as a reason to size up. The same caution applies to the September effect and the best and worst months for bitcoin. For year-end volatility around options expiry, see what triple witching is, and for the market's fear gauge, what the VIX is.

Quick poll

Do you expect a Santa Claus rally this year?

• Yes, it usually happens
• No, it has stopped working
• I don't trade seasonal patterns
• I'll watch it as a signal for January

Save my answer

What each answer means

• Yes, it usually happens: Over 55 years it rose 73% of the time on the Nasdaq, but it fell in each of the last five seasons.
• No, it has stopped working: The 2020s are weak so far, but six seasons are too few to call it dead.
• I don't trade seasonal patterns: Reasonable: the average edge is small compared with normal volatility.
• I'll watch it as a signal for January: After down windows, Nasdaq Januarys averaged −0.3% vs +3.5%, on only 15 cases.

Your answer is stored only in this browser (localStorage). UXS does not collect, count or publish votes, so no totals are shown.

For a longer calendar pattern, see how stocks did in US presidential election years.

Decision helper

Common mistakes

• Calling any December gain a Santa rally (the window is seven specific days).
• Quoting long-run averages without noting the recent weakness.
• Treating a failed window as a reliable bear signal.
• Ignoring holiday liquidity and spreads.

FAQ

What is the Santa Claus rally?

A tendency for stocks to rise in the last five trading days of December and the first two of January.

How often does the Santa Claus rally happen?

On the Nasdaq Composite, 40 of 55 years (73%) since 1971.

When does the Santa Claus rally start in 2026?

From the close on December 23, 2026, ending at the close on January 5, 2027.

Did the Santa Claus rally happen last year?

No; the Nasdaq Composite fell 0.7% in the 2025–26 window.

Is the Santa Claus rally getting weaker?

Yes on this data: +0.4% average in the 2010s and 1 up window in 6 since 2020.

Does a missing Santa rally mean a bad year?

Not reliably; 2024 and 2025 were positive years after down windows.