Analysis: The US stock market has begun the "Christmas rally," and investors are positioning themselves early for optimistic expectations in 2026.

On December 23, the U.S. stock market kicked off the traditional “Santa Claus Rally,” with major indices generally closing higher. Gold and silver both hit historic highs, while platinum approached record levels. The cryptocurrency market surged before retreating. The S&P 500 index rose on Monday, wiping out all losses for December and aiming for an eighth consecutive monthly gain, which would mark the longest winning streak since 2018. This rally is driven by multiple factors. First, last Friday's record “Triple Witching Day” options expiration cleared a large number of bullish positions in the S&P 500 in the 6700-6800 range, freeing up space for stock prices to rise. The VIX volatility index fell below 15, reaching its lowest level since August, and the short-term implied volatility continued to compress, leading analysts to believe that the hedging demand from market makers shifted to a trend-following approach, propelling the market into a “slow climb” rhythm. Secondly, seasonal factors provided a favorable environment, with historical data showing that the end of the year is typically a strong period for the stock market. Additionally, investors are positioning themselves ahead of optimistic expectations for 2026, including accelerated GDP and corporate profit growth, as well as potential transformations in AI trading. The Federal Reserve Board of Governors member Milan stated that if the Fed does not continue to cut rates next year, there is a risk of recession, and dovish remarks further boosted risk appetite. Technically, the next psychological level for the market is the 7000 point mark for the S&P 500. (Wall Street View)