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How to Trade the 2021 Santa Claus Rally?

Mr. Market (SPY) may be moody, but he is also quite predictable at this time of year. I am talking about getting ready for the Santa Claus rally that is one of the most profitable stretches for investors year in and year out. And this year we have the perfect strategy to add a little more ho, ho, ho to your holiday season. Read the rest below...

Warren Buffett likes to talk about “Moody Mr. Market” and that investors need to learn how to take advantage of the wild mood swings rather than become a victim of them.

Another thing about Moody Mr. Market is that he tends to act differently at various times of the year. And over time, he has developed some fairly consistent patterns. This means that certain strategies have a higher probability of success when these seasonal trends are in your favor.

It’s The Most Wonderful Time of the Year...

The best example of this phenomenon is the Santa Claus rally in which stocks outperform at the end of Q4 and start of Q1. Since 1950, this short window has been positive 77% of the time which ranks it as the #1 stretch of seven trading days for stock investing.

BUT what if I could tell you that in certain years (like this year), there are even potentially bigger returns and that this bullish tailwind can start even earlier… as early as Halloween?

On top of that, I want to share with you the perfect strategy to make the most this upcoming Santa Claus Rally.

Why This Year’s Q4 is Even More Bullish

There are a couple of developments that can amplify this seasonally, bullish impulse.

And this year, they all are flashing GREEN!

First, the S&P 500 is up more than 20%. All the while, fund managers are woefully underperforming and underinvested.

Add this together and it means that fund managers will be aggressive buyers of stocks into year-end. That’s because they need to increase equity exposure to ensure that they don’t end the year underperforming their benchmark and risk losing capital or even their jobs. All this extra buying activity bodes well for stock advances.

The Right Strategy

The best way to take advantage of these bullish factors is to buy two categories of stocks that these fund managers will prioritize: momentum and deep value.

Momentum stocks are typically companies with accelerating sales and earnings that lead to major share price outperformance. In bullish markets, these stocks tend to go from overbought to even more overbought due to multiples inflation along with investors’ swelling risk appetites.

On the other end of the spectrum, deep value stocks are ones that have been ignored or forgotten by the market. They are deeply oversold and have very low valuations.

Like a dry tinder box, this means that any sort of spark can send shares rocketing higher. This year’s Q4 has many potential catalysts with falling coronavirus case counts, looming 2 trillion-dollar infrastructure package, and fund manager inflows. Any one of these could be that spark to these deep value stocks to get them on a serious momentum run.

Focus On Stocks Under $10

If you agree that these two categories have the most upside into year-end, then you should consider focusing on low priced stocks under $10.

Here’s Why...

Low-priced stocks have the most upside in any part of the market and benefit the most from a bullish environment. Additionally, most low-priced stocks either fall into the deep value or momentum categories explained above.

This universe of stocks always offers an incredible opportunity to savvy investors but it’s even more true this year when we will have a powerful wind at our backs due to bullish Q4 seasonality and the Santa Claus rally.

Earlier, we talked about Mr. Market and how we should take advantage of his mood swings. Well, these stocks under $10 is the best place to find the stocks that have been unfairly tarnished by Mr. Market's mood earlier mood swings, yet ready to shine at this unique time of year.

What To Do Next?

Discover the best stocks under $10. That is easy to do by starting a 30 day trial to our POWR Stocks Under $10 newsletter.

This newsletter portfolio harnesses an exclusive low priced stock strategy that has generated an average annual return of +62.88%. In fact, 4 times in recent history it has produced annual gains north of 100%.

Yes, we know that sounds too good to be true. And that’s why we offer a 30 day trial for only $1 so you can see for yourself.

This means that during the next month you’ll get full access to the entire POWR Stocks Under $10 portfolio, plus every trade alert by email & text. In fact, there are two more trades coming this Monday morning, October 18th.

There’s zero obligation beyond the $1 trial. However, we are confident that once you experience this potent trading strategy, that has beaten the S&P 500 for 13 straight years, that you will want to remain a member for a long, long time.

And if we are wrong, and you don’t like what you see… then simply cancel and pay nothing more.

So get started today and experience the market-shattering returns of POWR Stocks Under $10 for yourself.

Start 30 Day Trial for Just $1 >> 

All the Best,

Jaimini Desai
Chief Growth Strategist
Editor of the POWR Growth newsletter


SPY shares . Year-to-date, SPY has gained 19.51%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Jaimini Desai

Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles.


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