The financial markets are pulsating with collective hope and anxiety. As we stand on the cusp of year end 2025 and more , the bull market, now entering its robust fourth year, defies the usual seasonal torpor, presenting a tableau of statistical certainties and political contingencies. One need not be a soothsayer, merely a student of probabilities, to discern the historical precedent offering a comforting arithmetic. The fourth year of a bull market has traditionally been a period of amiable ascent – averaging 16%. Furthermore, the market’s current seven-month winning streak suggests momentum: 62.5% of the time, the market continues its upward trajectory the following month, a figure that swells to 87.5% three months hence.
More compelling still, in the idiosyncratic rhythms of the American presidential cycle, when stocks are up at least 5% heading into December of the first year—as is our current condition—the final month has closed higher twelve out of twelve recorded times. This is a statistical demonstration of historical gravity. These Bullish precedents are certainly fallible, but are also supported by a Risk On trigger by Sentiment Traders indicator that aggregates about 21 indicators encompassing momentum, breadth, volatility and sentiment. (SentimentTrader.com has a robust inventory of indicators and studies). Perhaps the highly leveraged money managers have already used most of their buying powder for December, but the Bullish bias remains as a supportive backdrop should an endogenous event by the Fed or SCOTUS temporarily derail the rally train.
Yet, the present moment is not without its paradoxes. The CNN Fear and Greed Index, another compilation of sentiment, breadth and momentum, bottomed out at a level of 6 or lower on November 20th and during the April 2025 lows, the precise moment this current, formidable 7+ month rally commenced. The November low arrived after a 5% decline compared to a similar Fear reading of extreme pessimism in April after an almost 20% calamity. Intriguingly, despite a powerful two-week charge into December 5th that has brought major indices within a whisper of all-time highs, the index languishes in the modestly “Fearful” zone at 33. The market advances on legs of worry, a stoic bullishness that eschews the ebullience of the crowd.
We might consult the almanacs, those quaint statistical quirks of cyclical wisdom. Jeffery Hirsch of the Almanac Trader suggests a seasonal script: a small top around December 5th (which occurred), followed by a corrective phase carrying us toward the 12th or 18th, before a final, decisive leg higher into month-end. This aligns, superficially, with the general chatter of professional pundits universally calling for a year-end rally—a chorus of consensus that often serves as its own cautionary note of over-optimism.
But a singular worry remains: a potential, sharp, but perhaps fleeting, setback contingent upon the Supreme Court’s impending verdict on the President’s tariff authority. A rejection by the high court in January could trigger immediate market volatility, causing the rally to hit the pause button for a time. However, once investors gain confidence that the tariff and trade picture will remain unaltered due to the administration’s anticipated use of alternate legal pathways, such as Sections 122 and 301 of a 1974 Act, 232 of a 1962 Act, and 338 of a 1930 Act, the market is expected to recover and ascend to new highs into the upper 7,000s in 2026. The underlying architecture of the bull market—buoyed by the anticipated arrival of significant tax cuts and capital spending in the first quarter of 2026—remains intact. Any such correction would be a momentary “disturbance in the force”, a mere buying opportunity for the discerning investor. Investors should expect large winners to become more selective in 2026 with a more bruising horse raise among trillionaire companies and as the profit universe continues to broaden with AI investments filling the sails of the smaller cap cohort that will also catch the tailwinds of tax cuts and deregulation. (RSP, SPSM, XLF and XLI are ETFs that should continue to gain ground on the MAG 7 and there AI cousins)
