Who Needs Santa? Equities can still likely push up into February

Well, Santa disappointed once again, as Equities officially failed to close positively during the so-called “Santa Claus Rally period,” which spans the final five trading days of a year, combined with the first two trading days of the new year. However, the lift in sectors like Industrials, Financials, and Technology looks to be a notable positive heading into early 2026.  Moreover, the minor SPX breakout, which marked the start of the first full week of January, looks like a big positive towards thinking a rally back to new highs is underway. Overall, similar to thoughts in late December, I expect strength into mid-January initially for US Equities, and anticipate that QQQ likely can play catch-up in the coming days.     

As shown below, $SPX managed to achieve a minor breakout today, but fell short of rallying sharply enough above 6909.78 to make the “Santa Claus rally” period positive. This now makes three straight years where this period has failed to yield gains, which I don’t believe has ever happened before.

However, similar to last year, the lack of gains during this time doesn’t need to usher in a bear market, and my thinking is that Monday’s gains should lead $SPX back to new highs.

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