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Perspectives

The Santa Claus Rally Begins

by Fortem Financial December 29, 2025

U.S. equity markets began the holiday‑shortened trading week on a firm footing. Broad gains in major indexes and the start of the Santa Claus rally marked this week. Following modest volatility in trading earlier in December, sentiment improved significantly as investors bet on year-end flows. As shown, the CNN Fear-Greed Index has moved materially higher from its readings earlier in the month.

The Santa Claus rally window officially began on Christmas Eve. That rally is traditionally defined as the final five trading days of December, plus the first two of January. This seasonal effect has occurred in roughly three‑quarters of years since the 1950s, with positive average returns of 1.4%. However, that did not happen in the last two years, but there have never been three consecutive years without a positive return.

Despite a strong seasonal start, trading remained light throughout Christmas week. On Friday, markets dipped slightly in thin post-holiday trading, with the S&P 500 retreating marginally. That pullback reflected the typical lack of liquidity during this period.

The Santa Claus Rally spilled over into gold and silver, which hit record levels, driven by expectations of lower interest rates and persistent market uncertainty. But the pace and shape of these rallies are unusual. Parabolic breakouts often occur when price momentum accelerates rapidly, driven by speculative capital and short‑term positioning, rather than by gradual accumulation based on long‑term fundamentals. Recent reports indicate that speculative traders are adding aggressive net long positions in silver futures, amplifying momentum beyond typical levels.

Fundamental support for precious metals remains. Physical demand, supply constraints, and geopolitical tensions underlie current price levels. However, the intensity of the recent rally suggests that speculative forces are also at play alongside fundamentals. Investors should prepare for higher volatility and understand that a speculative peak often precedes a corrective phase, not a straight continuation of the parabolic trend.

Overall, the start of the Santa Claus rally and record index levels reflect persistent confidence among investors, even as market leadership shifts and year‑end thin trading raise the potential for volatility. Strategic positioning now hinges not only on seasonal history but also on evolving monetary policy expectations and corporate earnings outlooks as the new year approaches.

 

Market and Index Changes for the Week Ending 12-26-2025

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. Data provided by Refinitiv.

 

Sincerely,

Fortem Financial
(760) 206-8500
team@fortemfin.com

 

 

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The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
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Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. The opinions expressed are solely those of the author, and do not represent those of Fortem Financial, LLC or any of its affiliates. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. Forward looking statements are based on current expectations and assumptions, the economy, and future conditions. As such, forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstance that are difficult to predict. Actual results may differ materially from the anticipated outcomes. Carefully consider investment objectives, risk factors and charges and expenses before investing. Fortem Financial is a registered investment adviser with the SEC. Advisory services are offered through Fortem Financial.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

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