Technical Outlook Improves for Possible Santa Rally
The major indexes were mixed last week after showing heightened volatility following the release of key economic news on employment and inflation. Wednesday’s midday lows held crucial support levels across the board with Friday’s strong rebound keeping hopes alive for a possible Santa rally.
The Nasdaq closed on its session high of 23,307 (1.3%). Resistance at 23,500 held. Support is at 23,000.
The S&P 500 settled at 6,834 (0.9%) with the peak hitting 6,840. Resistance at 6,850 was challenged and held. Support is at 6,800.
The Dow tapped a high of 48,289 before ending at 48,134 (0.4%). Resistance at 48,500 held. Support is at 48,000.
Earnings and Economic News
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Economic News
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Technical Outlook and Market Thoughts
For the week, the Nasdaq was up 0.5% and S&P edged up 0.1%. The Russell fell 1.2% the Dow dipped 0.7%. Year-to-date, the Nasdaq has soared 20.7% and the S&P has jumped 16.2%. The Dow is higher by 13.1% and the Russell has rallied 17% for 2025.
The Russell 2000 tagged a high of 2,534 with lower resistance at 2,550-2,575 holding. A close above the latter gets our October 8th Price Targets at 2,600-2,650 and the recent all-time peak at 2,595 back in focus. Continued closes above the latter could lead to a blue-sky run towards 2,700-2,750.
Support is at 2,500-2,475 with last week’s low at 2,487. Closes below the latter and the 50-day moving average (2,467) would indicate a near-term top with weakness towards 2,425-2,400.
The Nasdaq’s close on the session high cleared lower resistance at 23,250-23,500 on Friday. Multiple closes above the latter keeps upside towards 23,750-24,000 in the mix. The October 29th record high is at 24,019.
Support is at 23,000-22,750 and the 50-day moving average (23,126) with last Wednesday’s bottom at 22,692. Closes below 22,500 would be a renewed bearish development with additional weakness towards 22,250-22,000.
The S&P 500 fell 10 points shy of clearing key resistance at 6,850. Closes back above this level is bullish for another run to 6,875-6,925 with the October 29th all-time peak at 6,920.
Support is at 6,800-6,750. Closes back below the latter and the 50-day moving average (6,767) would imply a near-term top with further weakness down to 6,700-6,600.
The Dow recovered resistance at 48,000 after falling back below this level on Wednesday. Continued closes above 48,000 keep upside to 48,500-49,000 on the map. Our Price Target from February 2024 for the Dow remains at 50,000.
Support is at 47,750-47,500 with Thursday’s intraday low at 47,849. Closes below 47,250-47,000 and the 50-day moving (47,222) would suggest a near-term top with ongoing weakness to 46,500.
The Volatility Index (VIX) closed below 15 for the second time this month with Friday’s close on the session low at 14.91. The December 11th close was also on the session low and at 14.85. The August 28th low reached 14.12. Closes below all of these levels would be a very bullish signal for the market and likely lead to further weakness to 13.50-12.75 and last December lows.
Resistance is at 17.50-18 with the latter representing last Wednesday’s top. The 50-day moving average continues to break down like a rented mule and the 200-day moving average is in a clear downtrend. However, a market curveball can happen at any given time with closes above 17.50-20 being cautious signals for the market.
There are no major earnings reports over the next two weeks and the start of the fourth-quarter earnings season begins mid-January. This will be a very important period for the market as companies will likely talk about business for 2026.
In the meantime, if the bulls can keep Thursday’s and Friday’s momentum going, fresh all-time highs could be back in play this week or next week. We have been talking about nice round numbers coming into play for the major indexes since early October: Dow 50,000; Nasdaq 25,000; S&P 7,000; and Russell 2,650-2,700. These levels could trip at some point during the first quarter. These are also our Price Targets from October of this year and for the blue-chips, it represents our February 2024 Price Target.
Futures are green as we head to press Sunday evening: Nasdaq futures are soaring 115 points; S&P 500 futures are higher by 19 points; Dow futures are up 43 points; and the Russell futures are popping a 6-pack.
We mentioned we would try to get aggressive into yearend as we wanted to get a fresh start to the New Year. We added two Alerts and we also want to add a few more this week if the bulls can keep any momentum going. We could also have a quick trigger on these alerts, as well, because we don’t want to carry over any baggage into 2026.
Momentum Options Alerts Update
Closed Momentum Options Trades for 2025: 52-16 (76%, 17 triple-digit winners) / 2024: 77-17 (82%, 38 triple-digit winners). Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Stops” entered to close any alerts or “Limit Orders” in your brokerage account unless we list one. We will send out an “Alert” or “New Alert” if we want you to close a position or if a new position comes out. Otherwise, follow instructions at all times in the updates on Monday’s and Thursday’s along with Text Alerts and videos throughout the week.
United States Natural Gas (UNG $12.19, up $0.16)
Option: UNG February 15 calls
Expiration Date: Ferbuary 20th, 2026
Entry Option Price: $0.50 (12/19/2025)
Current Option Price: $0.50
Exit Target: $1.00
Return: 10%
Stop Target: None
Action: Shares traded up to $12.23 with lower resistance at $12.25-$12.50 holding. Closes above $12.75 would be bullish for a quick trip towards $13.50-$14. Support is at $11.75-$11.50.
If shares fall below $11.75 this week, exit this alert for a scratch.
Mosaic (MOS, $23.80, down $0.16)
Option: MOS January 27.50 calls
Expiration Date: January 16th, 2026
Entry Option Price: $0.25 (12/18/2025)
Current Option Price: $0.18
Exit Target: $0.50
Return: -28%
Stop Target: None
Action: Friday’s low kissed $23.69 with upper support at $23.75-$23.50 getting tripped but holding. Resistance is at $24.25-$24.50.
If shares fall below $22.50 this week, exit the alert.
Lumen Technologies (LUMN, $8.19, up $0.35)
Option: LUMN January 11 calls
Expiration Date: January 16th, 2026
Entry Option Price: $0.50 (12/3/2025)
Current Option Price: $0.15
Exit Target: $1.00
Return: -70%
Stop Target: None
Action: Shares traded to a high of $8.29 with lower resistance at $8.25-$8.50 getting cleared but holding. A drop below the latter would be a ongoing bearish signal. Resistance is at $7.75-$8.
The current bullish setup would be voided if $7.50 fails to hold with the Fibonacci Stop at $5.13. Last week’s low tagged $7.56.
MGM Resorts International (MGM, $37.30, up $0.53)
Option: MGM January 28 puts
Expiration Date: January 16th, 2026
Entry Option Price: $0.60 (11/20/2025)
Current Option Price: $0.30
Exit Target: $1.20
Return: -50%
Stop Target: None
Action: We will likely hold this Alert into yearend as “put protection” before exiting to save any remaining premium. However, if shares clear $38 this week, exit the Alert. The ask is 47 cents.
Rani Therapeutics (RANI, $1.51, down $0.01)
Option: RANI April 5 calls
Expiration Date: April 17th, 2026
Entry Option Price: $0.38 (11/5/2025)
Current Option Price: $0.20
Exit Target: $0.80
Return: -47%
Stop Target: None
Action: Support is at $1.25-$1. Resistance is at $1.75-$2.
We will likely close this alert next week so we have no baggage from 2025. We can still keep shares on our Watch List.
Rani Therapeutics had no revenue until this year and in its latest earnings update it reported a better-than-expected loss but no revenue. The company is developing a proprietary oral delivery technology intended to enable drugs that are injected, to instead be taken orally. They signed a $1 billion deal with Chugai Pharmaceutical in October. This could mean NO MORE SHOTS for many drugs. Any update or approval could send shares zooming.
