Santa Claus Rally Comes Up Hair Short, Focus on January Barometer By: Jeffrey A. Hirsch & Christopher Mistal | January 05, 2026 | Email | Print

For several hours today it looked like the Santa Claus Rally was going to materialize but Santa was a no-show for the third year in a row despite solid market gains today. From its close of 6909.79 on December 23, 2025, through today’s close of 6902.05, S&P 500 declined 0.11% thus the Santa Claus Rally is now officially negative. For what it’s worth the Dow was up 1.1% over the Santa Claus Rally period and logged a new all-time high today to ring in the year with across-the-board strength.

 

Defined in the Stock Trader’s Almanac, the Santa Claus Rally (SCR) is the propensity for the S&P 500 to rally the last five trading days of December and the first two of January with an average gain of 1.3% since 1950. This indicator was discovered and first published by Yale Hirsch in the 1973 edition of the Almanac.

 

The lack of a rally can be a preliminary indicator of tough times to come. This was certainly the case in 2008 and 2000. A 4.0% decline in 2000 foreshadowed the bursting of the tech bubble and a 2.5% loss in 2008 preceded the second worst bear market in history. Down SCRs were followed by flat years in 1994, 2005 and 2015, and a mild bear that ended in February 2016. In 2024, New Years jitters were quickly shrugged off, and the S&P 500 logged its second straight yearly gain in excess of 20%. However, last year, in 2025, the absence of Santa preceded the brisk tariff induced selloff that knocked S&P 500 down 18.9% from its February closing high to its April 8 closing low. Of the 17 down SCRs since 1950, 12 years have been up and 5 down, but the average gain is a tepid 6.7%. As Yale Hirsch’s now famous line states, “If Santa Claus should fail to call, bears may come to Broad and Wall.”

 

 

With the Santa Claus Rally a no show we will be watching for a positive First Five Days (FFD) and January Barometer (JB), the second and third legs of our January Indicator Trifecta. With two more January indicators remaining, we will reserve final judgement until the end of January when the JB result is officially known. However, should the January Barometer be negative, it will weigh heavily on the outlook for full-year 2026.