This week, investors and little kids are wondering the same thing: Is Santa Claus really coming?

 The “Santa Claus rally” is a technical indicator coined by Yale Hirsch in 1972, five years after he created the first edition of the Stock Trader’s Almanac. It covers the last five trading days of the year and the first two of the new year.

Hirsch’s line: “If Santa Claus should fail to call, bears may come to Broad and Wall.” (That’s the intersection in lower Manhattan where the New York Stock Exchange is located.)

The Santa Claus rally is the first leg in the Almanac’s “January indicator trifecta,” which includes the January early-warning system (the first five trading days of the year are supposed to foreshadow the market’s direction for the year), and the “January barometer,” where the way the Standard & Poor’s 500 goes in January more definitively sets the market’s directional tone for the year.

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Hit all three, and you have the January trifecta, but you can’t do it without first getting a visit from Santa.

This year, the period to watch starts on Dec. 24, Christmas Eve. Since 1928, the Standard & Poor’s 500 has averaged a 1.6% gain over the last five trading days of each calendar year; that average gain is 1.3% if you bring up the starting point to 1950, so lower but still respectable given the short time frame.

Wall Street is debating whether the Santa Claus rally will happen in 2025.

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Why Santa Claus rally happens

Theories behind the Santa Claus rally center on tax-loss selling – and then re-investing the money – seasonal optimism, holiday shopping, and lower levels of institutional trading, since many firms cut back their work time around the holidays.

If stocks fall during the last five trading days of the year, it’s considered a sign of nervousness and caution in investors considering the year ahead.

One historical note on the Santa Claus rally is that it has overcome slow starts in December. Dating back to 1950, in years when the S&P 500 posted a negative performance earlier in December, Santa still showed up more than three-quarters of the time, in 20 of the 26 years in which the holiday month got off to a sluggish start.

The S&P is in positive territory for December, through January 19, albeit gaining just 0.3%.

And while history says the safe bet would be to expect Santa to show up, not everyone is anticipating sleigh bells.

Will Santa Claus rally happen in 2025?

Jeffrey Bierman, chief strategist at Genesis Cog, says he thinks Santa has already come and gone.

In an interview on “Money Life with Chuck Jaffe,” Bierman said that the Standard & Poor’s 500 rallied from 6,500 during Thanksgiving weekend to nearly 7,000, but that he didn’t expect it to break through to new highs.

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“What you’re just seeing, I wouldn’t call it a fatigue, but you’re now in the ninth inning of a baseball game where you’re getting a little bit of tax lost harvesting, a little bit of window dressing, a little bit of performance gaming, a little bit of adjusting to some seasonal sector rotation,” Bierman said, “but the market right now is just kind of limping into the end of the year. So don’t expect much of a slide below 6550, but don’t expect much of a rally above 7,000.”

What’s next for stocks in 2026

While Bierman – who also serves as chief market technician for TheoTrade and is a professor at Loyola University of Chicago – questioned the potential for a December rally, he did say he likes the look of seasonal rotation into the new year, especially as the market rally is gaining broader support.

“For most of [2025], the market was carried by technology and financials, but technology has come down from the [artificial intelligence] sugar high,” Bierman said. “And now there’s a broadening of the market. There’s a lot of money going into consumer staples that wasn’t there. There’s a lot of money going into certain consumer durables that wasn’t there. There’s some money going into REITs that wasn’t there.

So I like where it is right now for the next five to six weeks, but I do expect sometime in February to get some sort of corrective move to digest the move that we’ve made.”

Bierman said, however, that he has bigger concerns for how the market will perform deeper into 2026, noting that he believes the Federal Reserve has “run out of bullets,” setting up a bigger correction.

“We’ve got one more rate cut expected next year, so what is going to be the tailwind to drive the market other than earnings?” Bieman said in the interview, which aired on Dec. 16 (link to moneylifeshow.libsyn.com/allsprings-bory-inflations-not-sticky-its-stuck). “I really don’t know at this point, but I would expect the market to correct 10%, at a minimum, in the first half of the year.”

But expecting a correction doesn’t mean Bierman only sees ugliness.

In fact, he finds valuations “much more compelling than they’ve been in quite some time” and foresees the potential for another leg up late in the year with artificial intelligence providing some of the juice to replace a rate-cut regime. While AI technology can create layoffs that slow the economy, Bierman said it also helps companies improve profitability, and not just tech companies but firms in sectors like health care and more.

“The economy is actually poised really, really well for at least the next year or two,” Bierman said. ”I do not see the market falling out of bed like a lot of people are crying for. … Overall, technically and fundamentally, this is not one of those markets where it’s screaming, you know, a bubble. It may be overbought, but overbought is a condition, not a trigger.”

That’s why his advice for investors is that less is more.

“I’ve made more money doing nothing than doing something, which is to say that patience goes a long way in this business,” said Bierman, who expects the opportunities to surface in the second half of the year. “If you’re a long-term investor … wait until prices come down and mean revert to trend and then dig in and start to kind of chip away and buy things. “

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