Even in a season to be jolly, it's not always easy to be cheerful when you're a child stricken with cancer. But Herman Elvir, 16, who has lost his right arm to the disease, can still laugh as he wields a felt-tip marker to draw a gaily colored Christmas tree. Nearby Rachel Daly, 6, who is almost bald from the effects of chemotherapy, happily scribbles away with crayons and asks a visitor, "Do you think my Christmas card will be selled?"

Herman and Rachel are among hundreds of pediatric patients who take part in a 17-year tradition at Houston's M.D. Anderson Cancer Center. In year-round weekly art classes the kids create holiday cards of their own design; eventual!) 10 cards (plus special sets) are selected by hospital volunteers and then reproduced for sale nationwide.

With medical advances, says Dr. W. Archie Bleyer, Anderson's chief of pediatrics, "we have seen an overall survival rate of 70-90 percent among our patients." That makes it more important than ever, he adds, that these children maintain as many normal activities as possible in anticipation of their rejoining the "well." Thus the proceeds from card sales, which reached a record $662,000 last year from sales of 4 million cards, provide summer camps, recreational outings, weekly parties and other activities for the hospitalized youngsters and college scholarships for former patients.

This year the project is getting a boost from author Erma Bombeck, who, as volunteer spokeswoman, salutes the courage of the kids and praises the "innocence, simplicity and joy" that shine in their art. (For ordering information call 800-231-1580; prices vary with size and are $9 or $10 per box of 10 or 20 cards.)