Charting the Markets: Santa Failed to Call, So Now What?
The old adage says the markets may have a rough year ahead, but is it true?
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
The Santa Claus rally indicator failed to deliver a win at the end of 2024, so as the saying goes, "...bears may come to Broad and Wall." Now, while this indicator is right about 78% of the time, the other side of the coin says it is wrong 22% of the time. However, of that 22%, the stock market did not go down every time. In fact, as recently as 2023 the bears failed to deliver after a poor Santa Claus rally performance (markets were much higher in 2024). In 2024, the gains came on the first and last day of the Santa Claus rally.
The conditions of the stock market, along with volatility, price action and what happened leading up to the Santa Claus period are more important. Further, the January performance should be watched more carefully as new money flows filter into the stock market. The calendar does not recognize money flows.
The S&P 500 chart, above, remains strong though the MACD (moving average convergence/divergence) is now pointing lower, crossing bearish for the first time in months. We warned this could be happening over the last couple of weeks.
Stochastics remain under pressure. Money flow is fair, but the price action remains in the upward-sloping channel. We'll give the market the benefit of the doubt, especially with earnings season coming up, which is often a bullish period.
