Equities are extending the win streak to start 2026. Despite the Venezuela news over the weekend markets moved higher yesterday with cyclicals and small caps leading the way. The S&P 500 gained 0.6% but the equal-weight added almost 1%. Meanwhile the Dow Jones Industrial Average and Russell 2k were up >1.5%. After an initial move lower oil ended the session modestly higher given the looming geopolitical uncertainty, while precious metals resumed the upside surge.

Yesterday, marked the end of the Santa Clause Rally measurement period, the last 5 days of the previous year and the first two trading sessions of the current year. The rally in the first two session to start the year reversed most of the previous losses with the S&P 500 ending a couple of points lower, the third consecutive year of losses during the period. However, the Dow Jones Industrial Average was up 1.1%. The measurement of the SCR coupled with the two other measurement periods tracked by the Stock Trader’s Almanac, the first five trading days and the January Barometer, are collectively known as the January Indicator Trifecta. This has been used to give early signals about returns for the rest of the year. Of the three the SCR has had the lowest predictive power of trouble ahead especially recently, look no further than the last two years where returns weren’t too shabby. Historically, when the other two indicators have been positive markets have average double-digit returns ending higher ~80% of the time.