Trading System Signals on 12-19-2025
- Capstone Trading
- 2 hours ago
- 2 min read
The pattern in the stock indexes on Thursday and Friday along with the VIX suggests the market is going into holiday melt up mode, also known as the Santa Claus rally. On Wednesday, it looked like the bears were trying to gain control, taking the Nasdaq 100 futures below 25,000. The seasonality suggests that the market can rally into the end of the year.
One of the characteristics of the rally we see in these stealth bull markets is how the net gains can happen in the after-hours and very quickly in the first 15-60 minutes followed by counter trend price action for the remainder of the day. Thursday and Friday could be characterized by gap up, and sideways or "topping pattern".
When the VIX gets this low at this time of year and the market trades like this, one of the best trend strategies has been to simply buy the close of the session and then sell the open while trading mean reversion strategies such as V-Reversal during the day session.
The idea that you should day trade in the direction of the daily trend isn't always true. The last two days, V-Reversal captured a couple of nice short trades. Additionally, the longer term trends can have all of their net gains outside of the regular session. We saw this in 2024, where over 100% of the net gains in the Nasdaq 100 cash index was at night.
At the same time, the market is due for some strong intra-day trendy price action and I am anticipating at least one of those types of days between now and the end of the year. Strong trends that persist intra-day can lead to some of the best trading days. Lately we have seen many of the big moves that start intra-day, lack persistence and reverse.
The Two System Portfolio NQ hit another equity peak yesterday.
Hypothetical Trading System Portfolio Signals and Results:
Two System Portfolio NQ = +$1,975
50K Portfolio = +$2,347 on Micros, or +$2,094 when mapping Minis to Micros
Stock Index Portfolio 18 = -$3,280
Stock Index Portfolio 37 = +$3,065
Diversified Portfolio 57 = +$8,800
Silver Portfolio = +$4,100