by Ivan Martchev

December 23, 2025

While last week was marginally up (+0.1%) for the S&P 500, we had four-down days in a row, ending Thursday, after the S&P 500 declined 180-points (close to close). This is a meaningful move, but I could not find anything in the economic data to justify it. The market has gone down on good news or no news before, but when it does so in December, after an all-time high, it looks a little off, but last week’s trading may be related to triple witching options and futures expiration, which happened last Friday. Around the time these quarterly equity index futures expire, we often see program trading at elevated levels.

SPX Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

If we do not see any major negative geopolitical developments, I think we are in a prime position to set new highs and possibly a close above 7,000 by year’s end, which is 166-points (2.4%) above Friday’s close, doable in the few remaining trading days. What we are seeing is a consolidation pattern that implies a 5% move higher after a breakout. Keep in mind that November, December and January tend to be very strong months, but we have seen only strong flipping – a 5% drop followed by a +5% move – and no progress since late October. It is now possible that this consolidation pattern gets resolved to the upside.

VIX Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

One indicator that suggests an upside breakout is another large downside move in volatility. The VIX declined 11.62% on Friday – clearly related to the triple witching OPEX event. Large moves in the VIX, either to the upside and downside, should be noted, and they directly correlate to increased activity in index options. In this case, the large downside move in the VIX has to do with the expiration of quarterly index hedges and the selling or shorting of index options as the market approaches the end of the year.

Large investors removing hedges or shorting puts – mostly via limited downside spread trades – is a bullish indicator for the stock market. Because of the long consolidation pattern in the S&P 500 in the middle of a seasonally positive time of the year, I think the index will break out to the upside.

RSP-SPY Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

This sideways flipping also has to do with a rotation out of technology and into the value part of the market. Still, we have seen those rotations on and off in 2023, 2024 and earlier in 2025, and they never made much progress. The top eight-technology stocks (1.6% of S&P 500 stocks) comprise roughly 37% of the market cap of the S&P 500 and about 70% of the market cap of the NASDAQ 100. If money flows out of the technology-sector into the broad market, sideways flipping is perhaps the least problem we would be facing.

It is possible that we get better performance from the Russell 2000 Index in 2026, but I must see it to believe it. Right now, institutions are positioning themselves for the Russell and the broad market’s better performance, as they have many times in the past three-years – and every time it was a false dawn.

DAX Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

In early 2025, much was made of European markets’ out-performance over the S&P 500 (the black-line, above). It started after the 2024 election, in anticipation of policy changes that were anticipated from the Trump administration, and it ended after the U.S. stock market began to rally in earnest this May. (A good proxy for European markets is the German DAX Index, which has been flat for the past six-months).

While Europe could do better if the Ukraine war wraps up in 2026, I have a hard time seeing Europe out-performing the U.S. on a sustained basis. The reasons why the U.S. out-performs over the long-term is due primarily to the U.S. technology-sector and faster EPS growth in general. Regrettably, the European technology-sector is way behind the U.S., and profit growth is simply not as strong, with over-regulation and lack of coordination between multiple EU members being the main culprits.

I don’t believe such longer-term issues will change in 2026, even if peace comes to Ukraine.

All content above represents the opinion of Ivan Martchev of Navellier & Associates, Inc.

Please see important disclosures below.

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“Bad” Economic News Is Often Seen as Good Market News

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Gold Has More Room to Rise in 2026

Growth Mail by Gary Alexander
My Top 10 Books from 2025 (Part 2: Conclusion)

Global Mail by Ivan Martchev
There is Still Time to Get to S&P 7,000 in 2025

Sector Spotlight by Jason Bodner
Seeing Beyond Our Stubborn Biases

View Full Archive
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About The Author

Ivan Martchev
INVESTMENT STRATEGIST

Ivan Martchev is an investment strategist with Navellier.  Previously, Ivan served as editorial director at InvestorPlace Media. Ivan was editor of Louis Rukeyser’s Mutual Funds and associate editor of Personal Finance. Ivan is also co-author of The Silk Road to Riches (Financial Times Press). The book provided analysis of geopolitical issues and investment strategy in natural resources and emerging markets with an emphasis on Asia. The book also correctly predicted the collapse in the U.S. real estate market, the rise of precious metals, and the resulting increased investor interest in emerging markets. Ivan’s commentaries have been published by MSNBC, The Motley Fool, MarketWatch, and others. All content of “Global Mail” represents the opinion of Ivan Martchev

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