TSLA
Tesla
-- 462.280 NVDA
NVIDIA
-- 140.220 PLTR
Palantir
-- 82.380 MSTR
MicroStrategy
-- 358.180 AMD
Advanced Micro Devices
-- 126.290 
Understanding What Fueled The Santa Claus Rally Into A Positive Jan 2025
We continued to see a strong day for big tech stocks as they continued its strength to power ahead on Tuesday (24 Dec).
Megacap was higher led by $Tesla (TSLA.US)$ Broadcom Inc. and Advanced Micro Devices Inc. climbed as President Joe Biden’s team launched a probe into Chinese-made chips.
In a shortened pre-holiday session, the S&P 500 closed with an advance of over 1% amid thin trading volume. If we looked closely at the semiconductor, we can see that $VanEck Semiconductor ETF (SMH.US)$ is forming a nice upside, which we might want to take notice.
Big-tech Names Still Overweight In Institutional Investors
This time the Santa rally started on Christmas eve (Tuesday) where equity investors are hoping to see what is know as the Santa Claus Rally where stocks rise during the final five trading sessions of a year and the first two of the new one.
And we can see that the ETFs raked in a record $159 billion in November to reach $966 billion of inflows this year. That broke the previous annual record of $901 billion in 2021. ETFs’ organic growth rate of 16.4% that year will be hard to beat, though; this year’s rate was 11.9% through November. However, with one month left on the calendar, ETFs will almost certainly book their first $ 1 trillion year of flows.
Institutional investors portfolios are still concentrated with the big-tech names which we have been seeing that big-cap tech names are still the key leadership group in today’s stock market based on the market action of the past few weeks.
So I am expecting the buying by these institutional investors to be concentrated in these big tech names.
Factors Contributing To Santa Claus Rally
Tax-loss harvesting
Investors sell underperforming assets to offset gains for tax purposes, which can lead to a price rebound in early January. These could see some of the more popular stocks being favoured by investors after they have settled their tax.
Holiday spending
Increased consumer spending during the holidays can drive up company revenues and profits. These could mean that some of the ecommerce companies might do well, $Amazon (AMZN.US)$ might see an uptick in both these sales and delivery, not forgetting some of the other chinese commerce names like $Alibaba (BABA.US)$
Less institutional trading
Many institutional investors are on vacation during this time, so the market is largely influenced by retail investors.
Seasonal optimism
Investors are more optimistic during this time. Some sectors that tend to benefit from the Santa Claus rally include:
Retail and consumer discretionary stocks: These stocks can outperform, especially in a strong economy.
Technology sector companies: These companies can benefit from increased digital payments and e-commerce records. I am looking forward to see $Block (SQ.US)$
Specific financial sector companies: Brokers and investment banks can enjoy increased retail investor fees.
Why January Performance Likely Determine How The Year Would Go
Since 1945, when the year started with a gain in January, the S&P 500 rose an average of 18.3% in price during the entire year.
According to an analyst from CFRA, if the first month saw a decline in price, however, the average full-year return was negative 1.9%.
With the market up over 25% this year and no corrections of more than 10%, the S&P 500 has managed to stay solidly above its 200-day moving average for the entirety of 2024.
If we do not see any significant market selloff in the last few trading days of the year, then this shall be the 12th year since 1952 (when we went to the current 5-day trading week at the NYSE) that the S&P has traded above its 200-DMA all year
The average next-year change following these years has been a gain of just 4.6% compared to the average gain of 9.2% for all years.
Based on what I see from the parabolic SAR on 200 EMA, we are seeing a long signal coming up, this could mean that we are going to experience a pretty decent rally.
Summary
I will be watching the market trading these few days and the first week of January, this might be the time to look out for some good deals as investors offload some of their assets, and rotate into new one.
But still following the rules of getting good quality stocks, I think big tech and some of the magnificent 7 members could be considered.
Appreciate if you could share your thoughts in the comment section whether you think it is time to look out for some good deals amidst the Santa rally to prepare ourselves for a positive January 2025.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Dan’l : Thank you for sharing your insights, and I hope for your continued successes, both in the markets and life in general.
One thing I tend to forget, when comparing numbers, is to factor in all the ugliness: inflation, and devaluation.
Dan’l : Thank you for sharing your insights, and I hope for your continued successes, both in the markets and life in general.
One thing I tend to forget, when comparing numbers, is to factor in all the ugliness: inflation, and devaluation.