There's no way the S&P500 can rally again this year, right?
We just had 2 consecutive years of historic returns. The Nasdaq literally doubled since the end of 2022.
Total Crypto Market-cap is now at $3.4 Trillion. It was only $750 Billion 2 years ago. You do the math!
The S&P500 was up 24% in 2023 and then up another 23% in 2024.
How could things possibly get any better than this? I mean with the Fed, and the Inflation, and the Trump, and the Recession and the imminent crisis they all keep telling us about.
How could stocks possibly go up again in 2025? After the historic returns we just saw in back-to-back years?
Well, my friend Ryan Detrick put out a note saying that since 1950, after back-to-back 20% yrs, the S&P500 was up 20.0% on average and higher every single time (4 out of 4).
So not only is it possible for stocks to go up again, it's actually what has happened every single time, although to be fair it is a small sample size.
Nevertheless, the precedent is there.
This week was the end of the famous "Santa Claus Rally" period. This includes the last 5 trading days of the year and the first 2 of the following year.
Here are the final stats - down across the board:
As the saying goes, "If Santa should fail to call, the bears will come to Broad and Wall". Meaning that when stocks don't rally during this specific window, historically you'll be able to buy stocks at cheaper prices later on in the year.
But now we have the next seasonal indicator of the "January Trifecta", as our friend Jeff Hirsch puts it.
We are now two-fifths of the way done with the "First 5 Days of the Year Indicator". As the first 5 days of the year go, so goes the rest of the year, is the old saying.
In other words, historically when they come in buying, they usually stay buying throughout the year. It's when they come in scared that things don't usually end well.
So far so good for the First 5 Days:
We had Jeff Hirsch, Editor of the Stock Trader's Almanac, on The Morning Show this week, and I asked him whether the Santa Claus Rally was more important or if the First 5 Days Indicator was more important.
Jeff points to the numbers and says that the January Barometer is the most important of the Trifecta.
This is the tendency for the rest of the year to follow what the month of January does.
We'll be talking about all these seasonal studies, where they fit into our more macro top/down thesis, and what we're doing about it for our strategies and portfolios.
