Officially In The Santa Rally Window – Last 5 Days Of Dec Plus First 2 Of Jan The Point Everyone Misses – It’s When Santa DOESN’T Show That Matters
Ahoy there, Trader! ⚓️
It’s Phil…
We are officially in the Santa Rally home stretch.
Will we or won’t we “get one”?
It normally happens. But that’s not the main point – which seems to have been lost in the media hype.
The important part, according to Yale Hirsch who invented this thing back in 1972, is when it doesn’t happen.
“If Santa Claus should fail to call, bears may come to Broad and Wall.”
A failed Santa Rally tends to precede bear markets, or at least times when stocks could be purchased at lower prices later in the year. It’s not a trading strategy. It’s an indicator. A warning system.
Keep scrolling for what the VIX uptick might be telling us…
While the media debates if Santa will show up, systematic traders just follow the process.
Market Briefing:
Current Multi-Market Status:
- SPX: ~6,929.95 (Near NATHs!) – Bull TnT – Bullish Above 6800.08, PFZ 6720.43, Target 6949.15
- RUT: 2,534.35 – Bear TnT – Bearish Below 2543.59, PFZ 2572.9, Target 2519.47
- ES: 6,963.25
- NQ: 25,750.75
- YM: 48,997
- RTY: 2,551.2
- VIX: 14.86 ⚠️ (Ticking up from year lows)
- GC: 4,481.9
- CL: 57.99 / 55.12
- BTC: 87,646
The Overnight Picture
Right now the overnight futures are a little neutral to negative depending on which index you look at.
VIX is popping a little higher which may also be a small warning shot to an early sell-off.
Still doesn’t mean we won’t see or can’t see a rally week. Just means we may start the day/week with a little hiccup.
The Tale Of Two Swings
SPX: Firmly in a bull swing and popping new all-time highs. Target 6949.15 is within reach.
RUT: Firmly in a bear swing and meandering sideways, collecting that holiday period theta. Target 2519.47.
The divergence continues. Mr SPX is in full Christmas party mode whilst Uncle Russell is nursing a hangover in the corner.
The Santa Rally Reality Check
The official window: Last 5 trading days of December + First 2 trading days of January.
This year that’s December 24th open through January 5th close.
We’re in it. Now we wait to see if Santa calls or not.
Historical stats when he does call: S&P 500 gains an average of 10.4% in the following full year.
When he doesn’t (“naughty list”): Average of only 6.1% for the subsequent year.
That’s the real indicator. Not the 1.3% rally itself.
The Plan
Let’s see if we can pop some premium at the opening bell.
Expert Insights:
Santa Rally window is open. VIX ticking higher. SPX bull swing vs RUT bear swing.
Jeffrey Hirsch (son of Yale Hirsch who created the Santa Claus Rally concept) recently clarified that a failure to rally is not an immediate bear market signal, but rather “a flag to start looking at the other data – whether it’s seasonal indicators or other fundamental or technical measures.”
The data backs this up: when the Santa Rally is positive, the S&P 500 has delivered an average January gain of 1.4% and an impressive 10.4% return for the full year that follows. When the index is down during this period – the “naughty list” – averages drop to -0.1% for January and 6.1% for the subsequent year.
The Santa Rally is part of what Hirsch calls the “January Indicator Trifecta” – the rally itself, the first five trading days of January, and the full month January Barometer. When all three are up, the S&P 500 has been up 90% of the time with an average gain of 17.5%.
[Source: LPL Research – “Santa Claus Rally: Bullish Start to 2026?”]
In Other News…
Year-End Positioning Dominates Market Nobody’s Actually In
S&P holds near record during holiday week. Fed minutes from old meeting arrive Wednesday. Metals have best year since 1979.
Markets held near record S&P 6,930 as “year-end positioning dominates thin holiday trading”—financial equivalent of declaring strategy matters when participants absent. Wednesday brings Fed minutes from December meeting everyone already analyzed proving waiting for written version of known information counts as event. Silver gained 155% YTD, gold +70% marking strongest precious metals year since 1979 whilst everyone treating historic rally as routine headline between peace talks and Fed patience.
When Nobody Trading But Positioning “Dominates”
Holiday trading featured S&P essentially flat (Dow -20, S&P -0.03%, Nasdaq -0.09%) whilst narrative declared “year-end positioning dominates” despite VIX at 13.60 suggesting nobody cares. Materials led on metals rally: Freeport +2.6%, Newmont +0.8%, iShares Gold Miners +2.7% premarket because apparently mining stocks only sector awake during holidays.
Fed Minutes: Waiting for Old News
Wednesday delivers FOMC December minutes at 2 PM—written record of meeting already dissected—alongside delayed EIA crude inventories because apparently holiday week perfect time for stale data releases. Fed’s hawkish 2026 outlook (one cut projected, seven officials want none) plus Powell’s “well positioned to wait” already known but minutes ceremony matters somehow.
1979-Level Metals Rally Nobody Notices
Silver +155% YTD, gold +70% marking strongest precious metals year since 1979 whilst oil down 20% annually creating commodity divergence nobody explaining adequately. Venezuela tanker seizures failed to reverse oil’s decline suggesting either geopolitical premium extinct or oversupply narrative unstoppable.
☕ Hazel’s Take
S&P near record, metals strongest since 1979, Fed minutes from old meeting Wednesday, positioning “dominating” empty market. When historic 45-year metals rally treated as holiday headline filler, probably acknowledging year-end more about narratives than numbers.
—Hazel, FinNuts
Rumour Has It…
Breaking from the Financial Nuts newsroom: Percy was spotted training his pigeons in “Santa Rally Window Recognition Protocols” whilst explaining that the VIX uptick required “Early Hiccup Warning Assessment with January Indicator Trifecta Integration.”
Hazel immediately updated her crisis flowcharts to include “If Santa Should Fail To Call Emergency Response Procedures” alongside “Broad And Wall Bear Arrival Contingencies.”
Mac raised his morning whisky and declared, “When SPX is popping new all-time highs whilst RUT collects theta in a bear swing, the proper response is obviously to check if Santa’s calling or just leaving a voicemail!”
Kash attempted to explain that “the Santa Rally is basically like a smart contract that only executes bullish sentiment in a 7-day window with 80% historical uptime” before getting distracted by the VIX uptick calculations.
Wallie grumbled that in his day, “we didn’t need Yale Hirsch to tell us that failed rallies were bad news – we just looked at the tape and knew!”
This is entirely made-up satire. Probably!
Breaking scoops courtesy of the Financial Nuts Newswire-because who needs sanity?
Fun Fact:
The January Indicator Trifecta: Yale Hirsch’s Warning System
When all three indicators are up (Santa Rally + First 5 Days + January Barometer), S&P 500 has been up 90% of the time with average 17.5% gains. When all three fail? Average -3.6% loss.
Everyone’s banging on about whether Santa will show up this year, but they’re missing the bloody point! Yale Hirsch didn’t invent the Santa Claus Rally in 1972 as a trading strategy – he created it as a WARNING SYSTEM. The 1.3% average gain over 7 days isn’t the story. The story is what happens when Santa DOESN’T call. “Bears may come to Broad and Wall” isn’t just a cute rhyme – it’s backed by decades of data.
Failed Santa Rallies have preceded bear markets and periods where stocks could be bought cheaper later. Even better: Hirsch linked the Santa Rally to two other January indicators. When all three are up? S&P 500 positive 90% of the time, average gain 17.5%.
When all three fail? Average LOSS of 3.6%. So yes, we’re watching to see if Santa calls. But not because we want the 1.3%. Because we want to know if bears are coming to Broad and Wall in 2026.
[Source: Stock Trader’s Almanac, Jeff Hirsch ]
Happy trading,
Phil
Less Brain, More Gain
…and may your trades be smoother than a cashmere codpiece
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