The Santa Claus Rally technically begins today. It is defined as the last five trading days of December, and the first two of January. Since 1950, the S&P 500 is up 75% of the time during this period with an average gain of +1.3%. It doesn’t mean that is HAS to work, but I present this data for members who like to be tactical. In other words, if you can watch the market and are looking to take advantage of the possible shorter-term seasonal strength, the odds are in our favor. Again, this doesn’t mean buy shorter-term calls and go crazy, but it’s likely to mean that the dips will be shallow, and we could see continued strength during this period.

While going through my screens, here are a few comments from the Focus/Watch Lists:

1) NVDA is near its 10 and 21-day moving averages. It had all that unusual “in the money” option trades last week that expire on January 12th. I think it could break $500 and possibly run into Jan OpEx. January 12th is also the week of CES, so we could see some partnership announcements, new product announcements, or possibly even a split (long shot but possible).

2) MSFT is tightening up near its 21-day and on low volume. There’s been some decent put writing in it the past week. If the market rallies, this could be one that runs back towards new highs.

3) I added to UBER yesterday, as it is forming a “3 weeks tight” pattern.

4) NOW is consolidating near it’s 21-day on light volume.

5) VRT is consolidating near its 10-day on light volume. It had a lot of activity recently in the Jan and March 50 calls.

6) ANSS announced that they are exploring a sale. This bodes well for SNPS and CDNS, the other two stocks on our watch list that are in the same “Software Design” sector. As I mentioned in a recent video, CDNS had a big Jan 2025 $350/$270 bullish risk reversal trade on December 15th. This trade shows strong confidence that the 270 level should hold over the next year, while they are also long upside calls for a potential bigger continuation. CDNS also saw Jan 2024 $255 puts sell to open last week, and in a separate trade, saw Jan 2024 $280 calls bought. Again, I’m just showing you how I try to combine technicals and fundamentals with unusual options activity to help increase our probabilities of success.

Thank you and good luck!