Will Post‑Christmas Buyers Step In — or Step Back?
The S&P 500's winning streak continues. The question now is whether recent strength sets up a 'sell-the-news' reaction after the holiday.
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Following thin, but positive trading on Christmas Eve, the S&P 500 is on a five-day winning streak heading into the Santa Claus rally period that begins the day after Christmas. The buying was broader on Wednesday, with around 60% of stocks advancing, but small-caps lagged again, while the DJIA led. The Magnificent Seven was flat after strong action on Tuesday.
The question now is whether this recent strength sets up a "sell-the-news" reaction to the potential Santa rally. Market participants are obviously anticipating positive action and trying to increase long exposure before it begins. Will there be a surge in buyers after the holiday to keep things running, or will short-term traders take their gains and close their books for the year?
We will see, but there will be quite a bit of random action as investors make tax moves, harvest losses, take gains, and position for 2026. While there is typically at least one substantial bout of profit-taking near the end of the year, timing when that will occur isn’t possible.
My primary focus for the rest of the year is keeping accounts as close to their highs as possible. I feel good about my results and don’t want to give back gains. I’ve been working on identifying new candidates for 2026, and I’m taking on some initial positions so I can track them more closely. I’ll have updates on several new names next week and will update current positions on Friday.
I want to wish everyone a merry Christmas and happy holidays. Forget the market and enjoy the love of your friends and family. I’ll see you on Friday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
