‘Lack of Santa Claus rally worrisome’ as S&P 500 breadth hits lowest since Jimmy Carter era, analysts say – Invesco QQQ Trust, Series 1 (NASDAQ: QQQ), SPDR S&P 500 ( ARCA:SPY)

The S&P 500 is sending out a rare technical warning signal that hasn’t been seen since 2017. jimmy carter As of Thursday, 14 consecutive days of losses dominated the market trend.

What happened: Warning: “Market tops have to start somewhere, and many tops start with breadth divergences” Ed ClissoldNDR’s chief U.S. strategist noted that this marked the longest losing streak since October 15, 1978, Business Insider reported on Monday.

The troubling market breadth comes at a time when the benchmark index is just 4% below its all-time high, masking deeper problems beneath the surface. The equal-weighted S&P 500 index, which is more reflective of typical stock performance, is down 7% from its peak.

Historical data paints a worrying picture for investors. After a similar sharp decline since 1972, the S&P 500 returned an average of just 0.1% over the next six months, well below the 4.5% typical gain across all periods.

Entering the traditionally bullish year-end, the market faces a severe test. “The lack of Santa Claus gatherings is not only worrisome from a seasonal perspective, but it also contributes to the deepening of broad divisions,” Clissor warned.

To add insult to injury, the NDR’s sentiment indicator shows investors have remained extremely optimistic since September, marking the seventh-longest period of excessive bullishness since 1995. The move pushed the market to its worst weekly performance since March 2023.

“If stocks fail to correct the recent broad divergence in the coming weeks, it suggests our fears of a more difficult 2025 may come true,” Clissold concluded.

Also Read: Bitcoin, Ethereum, Dogecoin Lose Sheen Ahead of Holidays, But Top Analyst Points to Indicator, Says BTC Will Hit Highs Above $168,000

Why it’s important: The term “Santa Claus Party” comes from Yale Hirsch In the 1972 Stock Trader’s Almanac. Refers to the rising stock price trend in the last five trading days of the year and the first two trading days of the next year. Prices typically rise during this period due to factors such as year-end portfolio rebalancing, positive holiday sales reports, and optimism about the year ahead, all of which can generate strong returns for major stock market indexes.

When Benzinga asked readers if they were looking forward to a Santa Claus rally, 57 percent responded that they were looking forward to one.

The warning came even as the S&P 500 surged more than 1.5% to 5,956.61 on Friday.

The conflicting signals come as the benchmark index approaches its best-ever election-year performance, having hit 56 all-time highs in 2024, said Carson Research chief market strategist. Ryan Detrick.

Price Action: Meanwhile, the Dow Jones Industrial Average rose 1.55% to 43,000.53 points on Friday, while the Nasdaq rose 1.65% to 19,693.06 points. The S&P 500 also rose 1.53% to 5,956.61 points. SPDR S&P 500 ETF Trust spy Keep an eye on the S&P 500 as it closes up 1.20% Invesco QQQ Trust QQ It closed up 0.87%, according to Benzinga Pro.

Also read:

Disclaimer: This content was produced in part with help from Benzinga Neuro, and is reviewed and published by Benzinga editors.

Image from Shutterstock