The Santa Claus rally is coming! Will it continue to rise in January 2026? The S&P 500 is heading towards 7,000 points

Investment Insights - The "Santa Claus Rally" has arrived, and the "January Effect" in the U.S. stock market is to be expected. As Christmas approaches, the market begins to anticipate the "Santa Claus Rally." The "Santa Claus Rally" refers to the tendency for U.S. stocks to rise during the last five trading days of the year and the first two trading days of the new year. Since 1950, the S&P 500 has risen 79% of the time during this period, with an average gain of 1.3%. There are many theories about why this phenomenon occurs, including the optimistic sentiment during the holiday season, year-end bonuses, and fund managers buying high-performing stocks to beautify their portfolios for performance reporting. This year's rally will officially kick off on December 24 (Wednesday) and continue until the market closes on January 5 (Monday). Will the S&P 500 break through 7000 points? Currently, the market is focusing on the 7000-point level for the S&P 500. The options structure indicates that the positive gamma range for the S&P index is between 6950 and 7050 points. If the volatility during Christmas week continues to be eroded by time value, the 7000-point level will become a critical threshold. [Source: TradingView; S&P 500 Index Trend in 2025] Is the "January Effect" in the U.S. stock market to be expected? Looking ahead to January 2026, Oppenheimer analysts have found some encouraging signals based on the position of the S&P 500 relative to its 200-day moving average. Since 1950, when the S&P 500 opens above its smoothed trend line in January, the average gain has been 1.2%, with a 64% chance of rising. Conversely, when it opens below that trend line, the average gain is only 0.7%, with a 50% chance of rising. Currently, the index is above this critical technical level. This sets the stage for the market to prepare for the "January Effect" following the "Santa Claus Rally." The "January Effect" refers to the seasonal trend of stocks rising in the first month of each year