Santa Ends Today – Risk On Highway
The Santa Claus Rally ends today. Funny how the media is obsessed with it in December, but doesn’t say boo when the trend comes close to ending. They’re too busy waxing about the “other” 490 stocks right now. Anyway, the S&P 500 needs to close above 6910. If it doesn’t, Santa will have failed to call and below average returns during Q1 or the first half of the year may ensue. More on this later in the week.
Today is the second trading day of the year which has been very strong seasonally. My last 5 trend says to be heavily long small caps for the first 5 trading days of 2026. I think Friday’s surge by small caps relative to large caps is the beginning of another strong run this month.
Additionally, the high beta versus low volatility continues to support higher stock prices as it has for almost all of the time since April. In other words, it’s risk on. Buy more risk assets.
Finally, volatility remains a low teenager, just under 15. I am often told I don’t know much, but bear markets do not begin with the VIX buried in the teens.
On Friday we bought KRE, more SSO and more IYR. We sold BKLN, RSP, PCY, some EEM, some AHTFX and some VGK.
