Trading the Santa Rally

The Santa Rally

You may have heard the name ‘Santa Rally,’ but what exactly is it? Let’s check out this post by Jeffrey Hirsch, made on December 21st.

The Santa Rally time frame can be good for short-term trades, in addition to an omen for the stock market for the following year.

We are just now in the beginning of this time frame, but so far, so good for bulls! The market has continued to creep higher, and setups abound.

My Favorite Tickers Right Now

Right now, I am focusing on tickers with squeezes also in their Run into earnings time frame (i.e., The Hot Zone). We have yet another earnings season coming up in January, which means many tickers have already entered into their earnings run time frame.

Why? Anytime you can combine multiple setups, your edge gets even stronger.

Right now, I’m trading Tesla (TSLA), Microsoft (MSFT), Adobe (ADBE), and Nvidia (NVDA). These tickers have squeezes, plus are in the Hot Zone!

My Favorite Trading Strategy

My favorite trading strategy for direction setups is the butterfly. The butterfly is my favorite way to be long, optimize my risk to reward, and enter the market more conservatively, allowing traders to be patient. I also love the low barrier to entry, as butterflies are generally around 1/3 of the price as a long call would be for the same setup. With a long call, not only are you spending more but you’re targeting less as well. A regular target on a long call is generally between 25-50%, but the target on a butterfly starts there, and can be upwards of 100% or more. Check out this example of my 81% winner in the SPX from last week. 

P.S. Want to learn more? Check out my Stacked Profits butterfly class in our Simpler Trading store. Simpler Trading is having a New Year’s Sale, and if you use code NEW24 you can save up to 30% on select products!

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