The market’s “Santa Claus rally” — strong performance in the last trading days of the year, often spilling over into the first few trading days of January….

… If the Santa Claus rally materializes this year, will it lead directly into the building hype of Donald Trump’s second inauguration on January 20th, 2025?

Mysterious drone sightings, potential geopolitical shocks and snap Fed decisions aside, today we’ll take a quick look at what the weeks ahead may have in store for stocks.

At writing, the S&P’s up 25% for the year. If you did nothing else in the market this year beyond owning SPY, you’re happy.

A strong finish to the year for the S&P might not challenge 1997’s 31% gain, but we could still have a chance at 2019’s 28.8% increase.

Now, what could a strong Santa Claus rally mean for Trump’s first days back in the White House?

Your Rundown for Monday, December 23, 2024…

Santa Claus Rally Has Little to Do With St. Nick

First things first, is the Santa Claus Rally for stocks a real thing? Yes.

Historically, stocks go up about 1% between Christmas and New Year’s.

Yale Hirsch, who started the Stock Trader’s Almanac, came up with the term in the 1970s to explain why, approximately 80% of the time, the S&P tends to do well in the final trading days of the calendar year.

But looking deeper, we see sentiment and thinner trading days are the reason, not the jolly fellow who puts gifts under the tree.

The theory says tax-loss harvesting is mostly done for the year by the holidays, trading volume is lower, investors are more at ease and optimistic, so they tend to buy if they’re active and not sell as much.

Hence, markets tend to levitate a bit over the holidays. What does this have to do with the upcoming Trump inauguration?

Mojo, momentum, vibes, energy, perception… A stronger market headed into January means more risk appetite and more enthusiasm for Trump taking office and kicking off his aggressive agenda.

If the Santa Claus Rally does its job, everyone returns on January 2nd eager to catch a tiger’s tail in the markets, and stocks could rip right through January 20th.

Elon Musk and the DOGE committee, Trump’s cabinet appointments, the strong focus on trade, tariffs and immigration… we’re facing a First 100 Days of a new presidential administration unlike anything we’ve seen in our lifetimes…

… and how the markets react will be very telling as to risk appetite headed into spring.

For now, let’s enjoy every bit of the Santa Claus Rally (again, if it materializes) heading into the end of the year.

Market Rundown for Monday, Dec. 23, 2024

S&P 500 futures are slightly in the green, taking a breather at 6,000.

Oil is down 0.40% to $69.20 for a barrel of WTI.

Gold’s down 0.55% to $2,630.10 per ounce.

And Bitcoin’s up 0.30% to $95,400.

By the way, we’ll be dispensing with the market notes section for the next few days. But we’ll be back to our regularly scheduled programming on January 3rd.

Take care of yourself, reader, enjoy the holidays… And check out our Christmas-Hanukkah issue on Wednesday.