👀 The Santa Rally starts this week.

Hi guys, it’s Kieran. As we enter the holiday season, many traders are seemingly taking the next couple of weeks off, so lets take a look at where markets stand heading into 2026.

Firstly the formalities. Practically nothing on the calendar for the next two weeks. Even the FOMC minutes on the 30th will likely not yield much in the way of surprises.

Headline risk is of course always there, so keep an eye on major events, particularly as market liquidity will be thin, so market moves will be magnified.

At time of writing most firms haven’t released their full holiday market schedules, however AquaFunded have, and it’ll give you an idea of what to expect. Normal market service is expected to resume on the 5th Jan.

📈 The Macro View

Almost perfect

What a year it been, with ups and downs, tariffs, trade wars, AI bubble fears. After all that, we are finishing the year with almost perfectly neutral market sentiment. No clear view of where the equity markets are heading next.

The Santa rally is still to come

The "official" Santa Rally begins on December 24. It covers the last 5 trading days of December + the first 2 of January.

The S&P500 is typically up 77% of the time.

The last 2 were negative, but there has never been a third straight down Santa Rally.

Previous year’s S&P500 Santa rally returns. Average returns during this period are 1.26%. Not bad at all.

Volatility coming early next year....get ready

Let’s finish off by taking a look at seasonality of the Volatility index (VIX). On a 20 year lookback, Q1 is usually the most volatile period of the year. Calm markets and an easy grind up during the Santa rally, is usually met with a surge in volatility mid-Jan just after traders have placed their bets for the year.

No matter the market regime, gains never come easy, so be prepared for a wild start to 2026!

OK guys, this will be the last newsletter for a couple of weeks. I would like to give you a heartfelt THANK YOU for subscribing. Over 300k impressions this year is insane!

I’m working on a new project that I will share with you soon. Until then, have a great holiday season and i’ll speak to you soon!

Kieran

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