VIDEO: Year-End Game Planning as 'Triple Witching' Brings Extra Volatility

In today’s Pro Portfolio video, Chris Versace explains why we could see a more volatile day in the market thanks to triple witching, before we see a more dramatic slowdown in the market over the next two weeks. 

We also explain our game plan for the next two weeks, which will include prepping for the reconstitution of the Pro Portfolio’s EPS Diplomats strategy, revisiting our current lineup, and watching for a Santa Claus rally. 

We’ll also keep a watchful eye on shares of American Express  (AXP)  and Bank of America  (BAC)  as they flirt with becoming 4.5% position sizes. 

Transcript

CHRIS VERSACE: Hey, everybody. Chris Versace here. And it is Friday, December 19. We are closing out the last full week of trading for 2025. That's right. The next two weeks-- ehh, we're going to have some holidays. And that means we're going to have some dramatically lower trading volumes, likely the lowest of the year, given how the Christmas and the New Year's Day holidays fall.

Now, we know many folks are going to be squeezing in back-to-back long weekends. And that means that we're going to have some, like I said, much, much lower trading volume. But as folks rest, recharge, and get ready for 2026, we wanted to get you ready. That's why yesterday we published a special Stocks and Markets podcast with Helene Meisler, Sarge Guilfoyle, Louis Llanes, Jason Meshnick, and myself, sharing with you what surprised us each in 2025 and what we're looking at in the year ahead.

If you haven't seen it or you haven't read the transcript yet, both are widely available. So please take the time. Chew through it. I think you'll find it not only helpful, informative, but probably a little funny as well, given some of the banter that we had back and forth. Now here's the thing, before we get to those lower-trading-volume days, today, the last day of the week, it could be a little volatile. Why?

Well, we have triple witching, which means we have the expiration of stock index futures, stock index options, stock options all expiring simultaneously. Now, some places they're reporting that there's quadruple witching today. But we checked in with Bob Lang. And as he pointed out, there are no single-stock futures expiring today, just triple witching, which again could make things a little more volatile than usual.

But as you know, we tend to focus on the medium- to longer-term opportunities when it comes to the portfolio. We'll stick to our knitting. We don't let any one particular day do anything to capsize the boat that we're riding. Now, as we close out today, I said we could see some of that volatility bring a stronger move than usual.

But we could also very well see some folks do what we call, set it and forget it, just given what I mentioned about the coming two weeks. So again, another reason why there could be some extra volatility right up into the close for today.

Now, even though we're going to have a much slower cadence of things next week. Remember President Trump issued an executive order closing the Federal government on December 24 and December 26. We also have a very light earnings calendar, really no earnings next week, and a very, very light economic calendar.

So things are going to be a lot slower next week. But rest assured that we will be sticking around and minding the store. And that's going to allow us to get a few things done, helping us get ready for 2026.

Does that include doing some of the legwork for the upcoming reconstitution and rebalancing of the portfolios EPS Diplomat's strategy? It sure does. Remember that we'll be closing out the existing positions on December 31 and reconstituting and initiating those new positions on January 2. So we will be taking the time over the next couple of days to get ready for that.

We'll also be taking a hard look at the Portfolio holdings with an eye towards 2026. Part of that is going to include reviewing some of these investment lists that folks are coming out with. For example, today, JPMorgan came out and said that Arista Networks and Broadcom are two standout tech names for 2026. Good to hear. Don't get me wrong, but as you know, we will follow the data and make our own decisions.

These lists, we will take into account what they have to say if only to inform us about investor sentiment. One other thing that we'll be looking for, as we move into next week, is going to be the Santa Claus rally. Will it emerge? Now, we will say that the Santa Claus rally, that term tends to get thrown around quite a bit. So let's review exactly what it is. And the time frame that we'll want to watch is the last five trading days of December, the first two trading days of the new year.

What does this mean when we look at the calendar? December 24 is the starting date to watch because we have trading on the 24th, the 26th, 29th, 30th, 31st. And then of course, we'll have the 2nd, and then we will have January 5th. So the starting date, December 24th, closing date, Monday, January 5th.

Now, a little background about the Santa Claus rally-- doesn't always happen. Well, it appears that, since 1950, it's happened about every three of four years. So call it 75% of the time. And when it does happen, the S&P 500 tends to deliver an average return of about 1.3%.

So we're looking to see if that happens. Sure would be a nice way to end the year. But remember, we're not in it for any one particular day, any one particular week. We are looking for the medium- to longer-term returns and plays, as I mentioned a few minutes ago.

Now, I will also say this that, realizing this weekend is the last shopping sprint before the Christmas holiday, we are going to hold back our usual Saturday signals until Monday. You'll still get a set of portfolio soup on Sunday, a little lighthearted fare, if you will. But I'll also share with you that, in addition to having the signals alert to you on Monday, we will also be having, on Monday, our last set of Portfolio Office Hours for 2025.

Now, you may be wondering, when are we going to get these next? Don't worry. I can promise you that Office Hours will be a portfolio staple in 2026. And with that, I will say, my friends, be sure to check your emails and alerts. We do have more stuff coming your way today.

But remember too that we are closely watching a couple position sizes looking at you, American Express, Bank of America. Should you cross over a 4.5% position size for the portfolio, we may have to do some prudent and yes, very profitable portfolio management moves. And if we do that, folks, we want to make sure that you are, of course, right there with us profiting along the way.

So with that, check your emails. Check your alerts. I know we're going to have some more stuff coming your way today. And we'll cap the week with the usual Weekly Roundup. We don't want you to miss it. Stay tuned. More coming your way.