You're Better Off Enjoying the Holidays Than Looking for Santa Claus Action
Monday's weakness indicates that traders are taking a break to close out 2025.
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Stocks bounced a little in the afternoon on Monday, but it was a poor day of action with around 66% of stocks losing ground.
Small caps did poorly with the Russel 2000 (IWM) losing around 0.7% but it was big-cap technology and the Magnificent Seven that did the bulk of the damage. Only 34 of 100 stocks in the Nasdaq 100 (QQQ) gained ground, with Tesla (TSLA) being the biggest loser.
There isn’t any significant news flow driving the action. To some degree, this is a sell-the-news reaction, as the market had run up in anticipation of the Santa Claus rally. When we entered the actual Santa rally period, there wasn’t much new buying power left.
In addition, there are the usual end-of-the-year moves. Investors may make tax moves and position themselves for the year ahead. There is a mistaken belief that the best-performing stocks won’t be aggressively sold because they will trigger tax consequences, but large retirement funds don’t worry about that issue, and many investors are willing to lock in hefty gains and pay their taxes.
The action is very random and hard to trade, and what makes it worse is that there aren’t any pockets of momentum. Precious metals sucked in some traders on Friday, and they were burned on Monday. In addition, my list of stocks trading up more than 10% contained only 26 names, with 20 of them priced under $10.
We’ll see if traders show up on Tuesday and create better action, but I suspect many folks are taking a break and won’t be back until next week. My best advice is to enjoy the holidays and don’t worry about trying to catch some Santa Claus action.
Have a good evening. I’ll see you tomorrow
At the time of publication, DePorre had no positions in any securities mentioned.
