On Friday, the S&P 500 and Nasdaq showed limited movement, with prior rallies observed in the days before Christmas. The S&P 500 was above its mid-December peak, while the Nasdaq required more improvements.
NVDA performed well, influenced by an announcement about chip tariffs, which also benefited other companies like MU and AVGO. TSLA’s chart looked promising after a dip to $475, similar to GOOGL before it. Attention is shifting toward seasonal effects and early January trends, as volatility metrics remain stable.
Market Position End Of Year
Gold and silver provided gains, while oil was affected by hopes for East European peace and fears regarding Venezuela. Bitcoin’s future remains uncertain, with questions about whether the Nasdaq could influence its trajectory.
As we sit here on December 29th, 2025, the market has already delivered much of its holiday cheer ahead of schedule. The classic Santa Claus Rally, which historical data shows produces a positive S&P 500 return about 77% of the time in the last week of the year, seems to have happened in the three days leading up to Christmas. For now, we should expect a tight trading range as the S&P 500 consolidates above its mid-December peak.
The recent pause on new chip tariffs has been a major tailwind for the technology sector, especially semiconductors. We are seeing this directly benefit earnings winners like Micron (MU) and fuel a turnaround in Broadcom (AVGO). This news has helped the PHLX Semiconductor Index (SOX) outperform the S&P 500 by nearly 5% this month, a trend we expect to continue into early 2026.
Dips in strong growth stocks are being bought quickly, which is a bullish signal for derivative traders. The recent drop in Tesla to the $475 level presented a clear opportunity that was met with heavy call option buying, similar to the action we saw in Google earlier this quarter. This pattern suggests traders should be ready to use options to capitalize on short-term weakness in market leaders.
January Effect
Looking into the first two weeks of January, we should anticipate the “January Effect” to play out, potentially benefiting last year’s laggards. Volatility metrics, with the VIX currently trading at a low reading near 13, support the idea of a calm market that could favor bullish strategies. This environment may be ideal for selling puts or establishing call spreads on indices that have room to run, like the Nasdaq 100.
In the commodities space, gold and silver continue their steady climb as the Federal Reserve has signaled a pause on rate hikes into the new year. Oil prices remain stuck, with traders weighing the possibility of a ceasefire in Eastern Europe against the risk of escalating conflict in Venezuela impacting supply. This leaves oil options trading with high implied volatility, creating opportunities for premium sellers.
Bitcoin’s relationship with the Nasdaq has become less reliable, which presents a unique trading dynamic. While the tech index has been consolidating, Bitcoin has surged to over $115,000, showing independent strength not seen since early 2024. Traders could look at this divergence as a pairs trading opportunity, using derivatives to bet on whether the gap between them will widen or close.
