The stock market could be headed for a 'Santa Claus rally' that pushes it to even loftier record highs

• At the end of the year, all eyes are watching for a so-called Santa Claus rally that could push markets to new record highs.
• The period in question is the final five trading days of the year, combined with the first two of the next.
• That span has historically seen an average cumulative return of 1.4% since 1969, according to the Stock Trader's Almanac.
• "A Santa Claus rally remains possible, despite volatility at the start of the month," Brad McMillan, chief investment officer at Commonwealth Financial Network, wrote in a recent client note.
• Read more on Business Insider.

In the last days of 2019, investors and Wall Street analysts alike are watching to see if markets get an extra boost from a "Santa Claus rally."

The holiday-themed phenomenon has given markets an end-of-year lift in 34 out of the past 45 seasons, according to data compiled by the Stock Trader's Almanac. It's recorded over the last five trading days of the year as well as the first two trading days in the New Year.

The Santa Claus rally has delivered an average cumulative return of 1.4% over those days from 1969 to present, the data show.

If the market rallies that much at the end of 2019, it could mean it ends the year on a fresh all-time high, and could even see the best annual return in 22 years, according to CNBC. In the last week, investors have all but ignored the ongoing impeachment of President Donald Trump and pushed the S&P 500 to a new high Thursday.

"December is historically a strong month for markets," wrote Brad McMillan, the chief investment officer at Commonwealth Financial Network in a December 4 note. "A Santa Claus rally remains possible, despite volatility at the start of the month."

A number of events have fueled fresh highs for markets, including positive news that the US and China will sign a Phase One trade deal soon. In addition, global markets ticked higher after a conservative victory in the UK signaled that the country will be moving ahead with Brexit.

"Brexit and, to a much larger extent, the China trade negotiations have taken center stage and are setting that stage for a Santa Claus rally that was sorely missed last year," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance in an email to Markets Insider last week.

The geopolitical news is supported by solid fundamentals, Vito Racanelli of Fundstrat Global Advisors wrote in a December 14 note.

"This December should be a lot better than it was in 2018," he said.

In fact, the performance of the S&P 500 over the course of 2019 could be considered a "very long Santa Claus rally," Ed Yardeni of Yardeni Research wrote December 11.

The S&P 500 suffered a vicious decline out on Christmas Eve last year after Federal Reserve Chairman Jerome Powell suggested that the Fed could raise rates as many as four times in 2019. He pivoted to a dovish stance shortly thereafter, laying the groundwork for record gains in 2019.

Now, "the Fed and the other major central banks are all playing Santa during this holiday season," Yardeni wrote, "and are on track to continue doing so in the new year."