Core Viewpoint - The S&P 500 Index (SPX) has entered a bullish seasonal period, with historical trends suggesting a potential rise in the index during the last trading days of December and early January, supported by a stronger-than-expected third-quarter GDP report [1][3]. Market Performance - The SPX closed at 6,929.94 on Christmas Eve, surpassing its late October intraday high of 6,920, indicating a breakout after previous unsuccessful attempts to clear the 6,900 mark [2]. - The SPX is expected to rise to approximately 6,967.91 by January 5, based on historical performance during the "Santa Claus rally" period, which has averaged a gain of 1.3% since 1950 [3]. Technical Analysis - The SPX's recent breakout marks the second occurrence this year of surpassing prior all-time highs, with the first instance occurring in late June, leading to a sustained upward trend [5]. - Potential resistance is noted at the 7,000 level, which is just 70 points above the recent close, and could act as a psychological barrier as well as an options-related resistance point [8]. - If the SPX fails to maintain its breakout and falls below late October highs, initial support levels are identified at 6,760 and 6,790 [9]. Sentiment and Short Interest - The short interest on SPX components has increased by 2.5% to a multi-year high, indicating a sentiment that could fuel further rallies if a breakout is sustained [12]. - Total short interest is up 45% compared to the 2024 close, suggesting a highly shorted market that may lead to short-covering rallies or brief pullbacks as shorts cover losing positions [13].

Core Viewpoint - The stock market is expected to experience a "Santa Claus Rally," with analysts from Goldman Sachs and Citadel Securities indicating a positive seasonal trend and potential for upward movement into year-end [1][2]. Group 1: Market Sentiment - Analysts believe that barring any major shocks, the current market conditions favor a positive seasonal period, with Goldman Sachs noting a cleaner positioning setup [1]. - Scott Rubner from Citadel Securities highlighted that retail participants are entering 2026 with strong conviction and the financial capacity to increase market participation [1]. Group 2: Market Performance - Major indexes are consolidating just below record highs, which increases the likelihood of a Santa Claus rally this year [2]. - As of December 19, the S&P 500 Index was up nearly 1% at 6,834.50, significantly above the 6,000 threshold, indicating a recovery after four consecutive days of losses [5]. Group 3: Santa Claus Rally Explanation - The "Santa Claus rally" refers to a market rally during the last five trading days of the year and the first two of the next year, with the S&P 500 Index historically gaining an average of 1.3% about 79% of the time since 1950 [3]. - Theories explaining the existence of this year-end rally include holiday spending, year-end bonuses being reinvested, general holiday optimism, and end-of-tax-year considerations [4].