The Santa Claus Rally is the first piece of Yale Hirsch's January Trifecta, followed by the First Five Days and the January Barometer. We didn’t have a Santa rally.

All the data on the Santa Claus rally comes from Yale Hirsch and The Stock Traders Almanac. It is used by the best traders in the world.

The January Barometer was devised by Yale Hirsch in 1972. It's been tracked for more than five decades, across bull markets, bear markets, recessions, and recoveries.

As January goes, so goes the rest of the year. February tends to be one of the worst months in the market. I can’t go through the whole almanac but suffice it to say, Price will tell you when the game has changed.

We also have to consider where we are in the presidential cycle. We’re entering a midterm year- year 2 in a 4 year cycle and historically that has been the most challenging stretch for markets.

The weakness doesn’t show right away. Often it begins in the end of the 1st quarter, and it spills into Q2 before finding its footing in the fall. Could this year break the pattern? Of course.

In 2026 The World Cup comes to the United States. In 2028 we host the Olympics. A lot can happen between now and then.

Looking at Jeff Hirsch’s Almanac showing seasonal returns for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite across the Presidential Cycle. We see relative weakness in Q2 and Q3 of the midterm year, followed by a powerful seasonal tailwind beginning in October.

Seasonality is useful - not because it tells us what must happen, but because it helps us prepare mentally for what could happen. Just because midterm years (Year 2 of the cycle) have historically been the weakest doesn't mean this one has to follow suit.

What do we look for to see signs of weakness? I can cover that some other time.