Cramer still believes in Santa’s rally until the end of 2021, even as Covid omicrones cases increase

CNBC’s Jim Cramer said Tuesday he believes there will be a Santa Claus rally this year, despite the angry Omicron variant fueling Covid cases over the holidays.

The seasonal stock market phenomenon has historically started now and lasted into the first days of a new year, said the moderator of “Mad Money” and used a more liberal time frame for the Santa Claus rally.

“It’s scary,” how many times this trend has worked, said Cramer in “Squawk Box,” citing research by market historian Larry Williams. “It’s hard every time you’ve made money with it, fighting something that was right.”

Cramer tweeted early Tuesday: “Historically, the Santa Claus rally starts today. It actually worked from 2007 to 2009. So it’s hard to doubt.”

Later, on Squawk Box, Cramer said, “If you bought today and only lasted six days, you’ve made money almost every year.” He added, “It’s a short-term trade, even though you will get into positive seasonality in January.”

January was a historically strong month for the stock market, borrowing the old Wall Street adage, “Like January, so goes the year”. However, the 1.1% decline in the S&P 500 in January 2021 did not dictate the year. Santa Claus rally or not, this year is ready for some big profits, barring major declines. For the full year of 2021, the Dow Jones Industrial Average rose 15.9% at the close of trading on Tuesday; the S&P 500 was up 23.7% and the Nasdaq Composite was up 19%.

US stocks rebounded Tuesday in a rally that would break a three-session losing streak. “The interesting thing is that we had this downturn and the Santa Claus rally would dictate that the downturn is over now,” said Cramer. For December, the Dow is up 2.9%, the S&P 500 is up 1.8% and the Nasdaq is down 1.2%.

It’s worth noting that Wall Street is debating the exact date of the traditional start of the Santa Claus rally. According to the Stock Trader’s Almanac, it takes place on the last five trading days in December and the first two sessions in January. Santa’s no-shows on Wall Street tend to precede tough times for stocks. The Stock Trader’s Almanac discovered this trend in 1972.

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