Stock Market Favors Santa Over Coal As Indexes Hit Highs; This Dow Stock Is Beating The Nasdaq
Dec 24, 2025 17:17:00 -0500 by DAVID SAITO-CHUNGIn a time-honored tradition on Wall Street, as market historian Yale Hirsch publicly discovered decades ago, the stock market received a pre-Christmas Day present.
Wednesday’s 3-1/2-hour session was long enough for Santa Claus to deliver higher prices for most stocks on both the Nasdaq and the New York Stock Exchange. Breadth was positive. Early data showed winners trampling losers by a 5-3 ratio on the Nasdaq, and by more than 2-to-1 on the NYSE.
Stock Market Gains
The day saw the NYSE composite hit an all-time high, rising nearly 0.4% and extending a rally into a fifth day in a row. At the session high of 22,257, the index heads into this year’s final four trading sessions with a plum gain of 16.5%. The S&P 500 and the Nasdaq composite ended Wednesday’s trade up 0.3% and 0.2% respectively. The former notched a new closing high for the second straight day.
“Santa Claus tends to come to Wall Street nearly every year, bringing a short, sweet, respectable rally within the last five days of the year and the first two in January,” Yale Hirsch’s son, Jeff Hirsch, and Chris Mistal wrote in the 2025 edition of the Stock Traders Almanac.
“This has been good for an average 1.3% gain since 1969,” Hirsch and Mistal added. “Santa’s failure to show tends to precede bear markets, or times stocks could be purchased later in the year at much lower prices. We discovered this phenomenon in 1972.”
The S&P 500’s daily chart shows a sturdy rebound after the large-cap index gouged its rising 50-day moving average with a 1.2% drop in higher volume on Dec. 17.
On that day, with five distribution days on the 25-session count and a sizable number of top growth stocks getting dragged, IBD decided to ratchet down its recommended exposure to the stock market to a still-robust target level of 60%-80% from 80%-100%.
Since then, that distribution-day count has shrunk to just three sessions. Namely, they include that severe Dec. 17 sell-off of down 1.2%, and two minor declines in higher NYSE volume vs. the prior session on Dec. 1, down 0.5%, and Dec. 16, off 0.2%.
The Nasdaq Composite
The Nasdaq, which still shows outperformance vs. the NYSE composite with a 22.2% year-to-date gain, still has five distribution days on its current book. The big drops of 1.7% on Dec. 12 and 1.8% on Dec. 17 perhaps help justify why IBD’s ETF market strategy has not yet returned to the maximum level of 80%-100%.
Thinner trading volume expected next week may also justify the choice not to shove all of your investing chips onto Wall Street’s table.
Keep in mind, too, that at 80% invested, that’s a significant level in which further upside in your portfolio is mighty possible. Plus, a wad of cash serves many useful purposes.
One, that 20% cash position within your active stock market trading portfolio offers at least some form of cushion against future volatility in the near term.
If we consider the weekly action of the Nasdaq, for instance, the composite index has made virtually no price progress for nearly seven weeks since it made new highs in the week of Halloween. This consolidation of gains is healthy, for sure. But chartists might also note a triangle-like pennant pattern forming on the Nasdaq. Since the week that ended Oct. 31, we’ve seen both a mini trend of lower highs and lower lows take shape at the same time.
If this action in the stock market continues, we could see the price range narrow even further. From that point, technical analysts say, watch for a breakout in price – either to the upside or the downside.
Two, the extra cash, depending on the market’s next significant move, could get quickly deployed in a future big stock market winner.
How Now, Hot Dow
The Dow Jones Industrial Average on Wednesday fared even better than the NYSE composite. Its 0.6% lift sent the blue-chip gauge to a new closing high of 48,731.
Within the Dow industrials, at least 12 of the 30 components finished the half-day session with a gain of 22.5% since Jan. 1. Put another way, this dozen of large-cap and megacap names are doing even better than the Nasdaq.
Within this group, the medical plays deserve attention.
On Aug. 4, Johnson & Johnson (JNJ) broke out of a saucerlike pattern that has a handle entry at 169.99. That price, coincidentally, is the exact same as the base’s left-side high. Since then, shares have ramped more than 26% to a high of 215.19. During that rally, shares of the health care titan have made several pullbacks, yet never once have they touched their rising 50-day moving average. Quite uncommon strength in this blue chip lately.
Weekly Chart Vs. Daily Chart
View a weekly chart, however, and indeed, J&J has bounced off its 10-week moving average. Those bullish rebounds gave secondary entry points.
J&J is perhaps viewed as a diversification play away from the Megacap Eight for professional investors. The company’s earnings are expected to grow 9% this year to $10.87 a share and increase another 6% in 2026, to $11.53, according to MarketSurge data. A five-year Earnings Stability Factor of 4 on a scale of zero – very steady – to 99 – very wild – is exceptional. J&J stock has a 2.5% annualized dividend.
The stock is also thumping the Nasdaq’s year-to-date return, with its 42% advance.
On Friday, the stock market will resume normal trading hours.
View General Market Indicators chart page here.
Please follow Chung on X/Twitter: @saitochung and @IBD_DChung
YOU MIGHT ALSO LIKE:
Want More Options Trading Strategies? Go Here