| | | Hey, it's Garrett. | Everyone's talking about Christmas cheer and holiday optimism driving markets higher. I'm about to ruin that for you. | The Santa Claus rally isn't about hope. It's not about flows. It's not about good vibes and year-end optimism. | It's about plumbing and probability. | What Actually Happens in Late December | Here's the thing nobody wants to admit: by late December, tax loss selling is largely done. | Institutional books are closed. Risk managers stop tightening and volumes decline. | So marginal sellers tend to disappear. | And when selling pressure collapses, prices don't need good news to rise. They basically just drift higher because nothing's leaning on them. | That's it. That's the whole secret. | I can show you this with data going all the way back to 1928. Early December is noisy, mid-month softens, and then there's a final stretch where the curve tilts upward with relatively strong consistency. | It's not a Christmas miracle. It's market mechanics. | The Real Engine Behind Year-End Moves | Look, I've been watching this for years. What we're seeing right now is exactly what happens when friction goes away. | All the bonuses have been paid. All the positions have been repositioned. Unless we get some very significant event this week, we don't have anything that could potentially shake things up on the liquidity side. | So long as there isn't any friction in this market, we're looking for a nice little move higher into the end of the year. | Window dressing and short covering is definitely in play. The rally depends on rates staying contained, but there's not a whole lot of news around that. | Why the Folklore Persists | Markets aren't timeless machines. Calendars, mandates, tax rules, human behavior - they govern them. And every now and then we get something that ultimately leads to something that's difficult to explain. | So people create stories. They talk about Santa Claus and Christmas spirit because it's easier than explaining that we're dealing with the absence of volatility and selling pressure. | But if you want to actually understand what's happening, forget the folklore. Watch the mechanics. | Historically, this is when the calendar stops fighting the tape. | What to Watch Now | Don't be shocked if we still see positive moves heading into the beginning of the year and rotation into a variety of different asset classes as people position for next year. | You're watching the S&P 500, NASDAQ, Russell, VIX, SPY and the QQs. | But remember - this isn't about Christmas magic. It's about what happens when the people who usually sell... just stop selling. | The rest is just marketing. | Stay Positive, | Garrett Baldwin | P.S. I'll be live with you on Monday, starting at 8:45 am ET. It's free to join the session. Click here to RSVP. | | The Market Has a 7-Second Memory Now | 0DTE options went from 5% to 60% of SPX volume since 2016. That's $1 trillion in daily notional flow — and most traders have no idea what they're doing. | Markets that used to follow predictable patterns now explode without warning. 60-handle moves from nowhere. Technical analysis getting shredded by what looks like random action. | It's not random. It's gamma flips, dealer hedging, and compressed timeframes creating a completely different trading environment. | DON-DTE — Don Kaufman's first-ever 0DTE-only training. Tuesday, December 23rd at 1:00pm ET. | A simplified framework for same-day expirations. No theory. No hype. Just process. | REGISTER FOR DON-DTE | Last training before 2026. Don't start the year reacting to faster markets. |
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