MORE often than not, we experience a rise in stock prices between Christmas and New Year. This is generally known as the “Santa Claus Rally.” For this year, it is believed that Santa may skip his visit. If this happens, this will be the second time it will occur within the last five years.
If we are to believe the offered explanation, the market in both instances shared a similar pattern just when the year is about to close. In particular, their trading results for the month of October were identical. Following the claim, the trading results in October seem to have a technical influence on the occurrence or non-occurrence of a Santa Claus Rally. This was observed to have consistently appeared in the last five years.
To recall, the market was on a general uptrend in 2011. But volume and value turnover in October stayed relatively low. This made the market move sideways to lower during the month. In November, however, the market picked up, driven by strong price actions. This led to a Santa Claus Rally in December. The same pattern happened in 2012.
Again, while the market was on a general uptrend for most of 2012, stock prices moved sideways to lower that October. Like the year before, strong price actions occurred the following November. And since total volume and total value turnover were bigger this time, the Santa Claus Rally that came in December propelled the market to a steeper climb.
In 2013, an entirely different story unfolded. The market quickly reached its peak for the year in May. From thereon, the market was on a general freefall. The fall, however, was interrupted by a series of three major recoveries. The third happened at the onset of October. Thereafter, the market fell the following month. Needless to say, no Santa Claus Rally occurred in December.
In 2014, the market resumed its upward climb. This time, the rise was more consistent. And while the market’s advances were met by a series of retreats, the market always still ended higher. Due to this relentless but more measured advance, the market by September had gone up by as much as 1,371.67 points or 23.29 percent from where it started at the beginning of the year. This was, at the other end, only 107.61 points or 1.48 percent below the market’s closing high of 2013. In October of that year, trading also slowed down. Like so, stock prices again became strong the following November. This also gave rise to a Santa Claus Rally in December that was, nevertheless, not as strong as in the last.
Globe’s bad methods
Like the controversial ad of a startup condom company in Germany that was banned by a Dusseldorf court last week because its message was misleading and grossly wrong, Globe Telecom’s collection tactic is getting irritating and definitely wrong. Aside from the email statements and cellphone text messages sent, Globe Telecom employs “tele-collection agents” to call you.
I thought I was the only one who suffered from the pestering calls of Globe’s tele-collection agents. I just found out that fellow Globe subscribers have been enduring the same agony. I also thought that these calls happened because I usually pay late (but not too late as to be delinquent). I have also found out that the calls still happened to those who claimed they had been paying on time.
After making a close review as to when the calls were made, I found out they were made several days ahead of my billing date just as when fellow Globe subscribers similarly received the calls. A call is fine. But “a call every single day as your bill remains unpaid,” to quote a complaint posted on Facebook by a fellow subscriber, the collection tactic is certainly pestering, if not insulting especially when you have been a long time subscriber.
Globe Telecom should be more professional. The text messages should be enough for responsible subscribers.
Bottom line spin
Last October, the market traded on comparatively bigger volume and value turnover that trading activity in November is again down and low as in the past. Under last week’s trading records, part of the reason why the market is finding it difficult to fly this November is that while the percentage of foreign investors’ participation to total market remained high at 58.81 percent, they continued to be net sellers.
What this means is that market demand is coming from local punters. And as we have seen in the past, local demand is not long-term and as strong compared to that of foreign demand. It easily gives way to profit-taking or selloff at the earliest chance to earn or of market weakness. Also, the general market trend has been on the downtrend since May, which now serves as this year’s trading peak.
Similar to what happened in 2013 as further confounded by popular weak economic global outlook, this may mean that a Santa Claus Rally may no longer occur this December. What remains to be positive in the current situation is the possibility of a market rally in the first quarter of 2016, prompted by the occurrence of the so-called “January effect.”
The writer is a licensed stockbroker of Eagle Equities Inc.. You may reach the Market Rider at marketrider@inquirer.com.ph , densomera@msn.com or at www.kapitaltek.com