As I’m writing this, I can’t help but think back to my December question: “Will we see a Santa Claus rally this year?”
Well, technically speaking, the traditional Santa Claus rally — which measures the last five trading days of December and the first two trading days of January — didn’t clearly materialize this time around. While markets held up reasonably well into year-end, we didn’t see that strong seasonal lift many may have hoped for.
If you blinked in January, you may have missed it. But the start of 2026 has been fairly steady, not dramatic. In plain English: the market has been positive, but it isn’t running away to the upside. The S&P 500 did push to new all-time highs in January and even briefly crossed the 7,000 level late in the month. However, overall gains were modest, and price action was more range-bound than explosive, although it’s worth noting that analysts widely expect 2026 to continue its bullish trend.
January did bring a few headline-driven moments — (more) tariffs, global negotiations, continued AI enthusiasm (and concern), and even a sudden bout of volatility in precious metals near month-end (silver plummeted roughly 28%-31% on Jan 30th, triggered by the nomination of Kevin Warsh as Federal Reserve Chairman). We also saw short spikes in volatility measures along the way. But importantly, most of these episodes were brief. Markets wobbled, but they did not break. Another reminder to not pay attention to the noise, as it can be very easy to get caught up in all the headlines.
One encouraging theme beneath the surface has been broader participation. In the past we’ve talked about “market breadth”, which is a measure of the health of the stock market by comparing the number of advancing (rising) stocks to declining (falling) stocks. So, what we’ve seen is that strength hasn’t been limited to just a handful of large companies. Even credit markets — which often serve as an early warning system when stress is building — are not signaling significant strain at this point. In other words, we have a strong, broad and convincing market (at least right now).
As always, we don’t try to predict what the markets will do next. We follow the data and allow our tactical strategies to respond accordingly. If conditions change, adjustments will be made. It’s comforting knowing that our money managers will keep a pulse on what’s happening and will stay disciplined and on the trigger.
So here we are. Now what? As long as the data remains supportive, we’ll continue as planned. Thanks for reading. Join us again next time.
