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What Normally Happens Between Christmas and New Years in Markets- Video and Transcript

Turbo Trading's Head Trader Robert Knight, MBA, gives a brief rundown of what markets are expected to do this holiday season. A transcript is below the video.

This is a video on what to expect in the markets coming into the year-end: the last two weeks over the Christmas break. Christmas is here is on Friday, December 24th; it's only a half-day. Markets closed at 1:00 PM Eastern time. They reopen on the 27th. And then, so there'll be open 27th to 31st. So it's a full day on December 31st.

So the thing about it is that obviously, this is one of the most important Christian holidays of the year. And so a lot of people, observe the holiday season not, not only the religious side, but you know, most, most companies also.

Just, if they're not religious, then they take, they do take breaks during that time period because everything shuts down. That's what we know. So, what can we expect? Well, one of the things that you'll find, and it's going to be starting, you know, now, today actually, probably this week going into the 24th. Is that the volume will really start to dry up.

Now, the last couple of days, it's been very strong. We can see that, but, um, coming into this Christmas, Holiday and through between Christmas and New Years, it's going to be, it's going to be very quiet. Most people are away on vacation, or they just don't bother to trade.

So, what you find then is- well, let's go back and look at the previous history we see here—the December timeframe markets last year. Well, with the COVID sell-off and then the next wave started in November, we did have the sell-off, but it rebounded very quickly. So, and here we see at the course just before COVID was the markets were off very sharply, this year back in, you know, 2/18 was markets strong, pull back 2/17. There's no, you know, they're drifted off. 2/16, they were strong. 2/15, they sold off just before Christmas and then took off again. So one of the things about stocks, if there's no volume, they tend to drift lower and fall under their own weight.

But that isn't necessarily, but there is no sort of necessarily a period of time in December that stocks are up or down. Lots of people say that's that Santa Claus rally, and you see the markets go up coming into the New Year. Others say it's tax-loss selling, and they sell it. Maybe it's a combination of both.

So that's not the important part. What the important part is is that there's the liquidity dries up, and you can get extremely violent, moves up and down. You get a lot of stocks. If, especially these little floats, if there's nobody around and they start, you know, the chat rooms get ahold of you start firing them up.

You get huge moves to the upside. You know $30, $40, $50 moves in some of these penny stocks, really stocks trading say under $5, and they'll move ten times higher because there's no one there's no selling pressure, nobody's around to deal with it. So what would we expect from the market here? It's not really telling us anything.

The market, the daily chart is, is consolidating in here. How to doubled how to triple top it's top of bottom it's mid-range could go either way. All's we know is that come Christmas between Christmas and New Year, that the volume will dry up, and the volatility will increase dramatically. That's typically what happens.


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