MW The week after Thanksgiving often kicks off a month of stock-market gains

By Lawrence G. McMillan

Investors can expect several seasonally bullish trading patterns from now into the new year

Stock investors can expect several seasonally bullish patterns over the next six weeks or so. This starts now, with the market tending to rally after Thanksgiving for a week or two. Even in the worst December market ever (2018), the post-Thanksgiving trade was profitable over the two weeks after Thanksgiving.

In many years, the Russell 2000 index RUT outperforms the S&P 500 index SPX, but SPX has the upper hand now, so we are not going to use iShares Russell 2000 ETF IWM options for the post-Thanksgiving trade. We may roll into them later.

In total, there are three seasonal patterns, beginning now and ending with the "Santa Claus rally" pattern, which starts in the last week of December and ends on the second trading day of the new year. Rather than trying to group all three into one trade, we are going to focus only on this post-Thanksgiving trade. This may also give the opportunity to sidestep the upcoming Fed meeting on Dec. 9-10, as there is still a good deal of uncertainty in the stock market about what the Fed is going to do about interest rates.

Buy 2 SPY (Dec. 12) at-the-money calls and sell 2 SPY (Dec. 12) calls with a striking price 15 points higher.

Ordinarily, we'd try to buy a long call and not bother with the spread, but with the VIX still relatively high, these SPDR S&P 500 ETF Trust SPY calls are very expensive. Roll up if the long call becomes 10 points in the money. Otherwise, the entire debit is at risk initially.

New recommendation: iShares Silver Trust ETF $(SLV)$

A new put-call-ratio buy signal has been issued for the iShares Silver Trust ETF SLV. Put buying exploded on what was a minor correction, indicating just how much negative sentiment there is towards precious metals.

Buy 3 SLV (Jan. 16) 48 calls in line with the market.

We will hold these calls as long as the weighted put-call ratio buy signal remains intact.

Stocks in a trading range

As for the broader stock market, the S&P 500 (SPX) SPX remains in a trading range. The index has rallied back to and slightly exceeded its declining 20-day moving average, near 6,750. Above that is a downtrend line at about 6,850, and then the all-time highs, at 6,900. One positive note is that SPX has exceeded last week's "Nvidia high," which was a resistance area in its own right. A move above 6,900 or below 6,500 would be significant, but, for now, SPX seems to be contained within that range.

Equity-only put-call ratios have continued to march higher, though, as traders have been steadily buying puts - probably more as a protective measure than a bearish speculation. Regardless, as long as these put-call ratios are rising, that is bearish for the stock market.

On a more positive note, breadth has improved considerably with the strong rally this week. As a result, both breadth oscillators are now on buy signals, and those buy signals arose out of deeply oversold conditions. Normally, these mean these oscillator buy signals will be strong ones. However, breadth has not been strong enough to move the cumulative volume-breadth (CVB) statistics to new all-time highs.

New highs outnumbered new lows on the NYSE for two consecutive days this week - that quickly stops out the recent sell signal from this indicator. In fact, new highs numbered more than 100 on both Nov. 25 and 26, so that generates a new buy signal here. I've said this previously, but I can't remember this indicator flopping back and forth like this. Normally, there would not be many stocks near new 52-week highs at the same time that there are many other stocks near 52-week lows. But that's the case right now.

The VIX VIX has dropped sharply from its peak of nearly 29 on Nov. 20. As a result, there is a new VIX "spike peak" buy signal in place, as of Nov. 21. That signal will last for 22 trading days, or until just about Christmas. It would be stopped out if VIX were to close at or above that peak of Nov. 20. The VIX fell fast enough that it avoided a trend of VIX sell signal. Such a sell signal would only occur if both VIX and its 20-day moving average were above the 200-day moving average.

The construct of volatility derivative was teetering on the brink of severe bearishness a week ago. However, that crisis has passed, and the construct is mostly bullish in its outlook for stocks. The terms structures are sloping upwards (the Cboe volatility index more steeply than the VIX futures), and the VIX futures are trading at premiums to VIX once again. Our weighted VIX futures premium calculation, VOLFUTA, has improved from -3.00 to +1.73, a strongly bullish move for the stock market.

We are seeing both buy and sell signals emerge, which is commonplace when SPX is in a trading range. We will still trade these signals, for each has its own targets and stops. Moreover, we are entering into a seasonally bullish time period for stocks, so that may be enough to tilt things in favor of the bulls.

Follow-up actions:

All stops are mental closing stops unless otherwise noted.

We are using a standard rolling procedure for our SPY spreads: In any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be a roll-up in the case of a call bull spread or a roll-down in the case of a bear put spread. Stay in the same expiration and keep the distance between the strikes the same unless otherwise instructed.

Also, for outright long options, roll if they become 8 points in the money.

Long 1 TSEM $(TSEM)$ (Dec. 19) 100 call and short 1 TSEM (Dec. 19) 115 call: Continue to hold without a stop for now.

Long 2 BXP (Jan. 16) 72.5 puts: We will hold this position as long as the weighted put-call ratio for BXP $(BXP)$ remains on a sell signal.

Long 2 CME $(CME)$ (Dec. 12) 285 calls: Continue to hold as long as the put-call ratio remains on a buy signal.

Long 1 SPY (Dec. 26) 659 call and short 1 SPY (Dec. 26) 679 call: This is the "spike peak" buy signal position. It will be held for 22 trading days. It would be stopped out if VIX were to close above 28.27, the most recent VIX spike peak.

Long 2 PLD $(PLD)$ (Dec. 19) 125 puts: We will hold as long as the put-call ratio is on a sell signal.

All stops are mental closing stops unless otherwise noted.

Send questions to: lmcmillan@optionstrategist.com.

Lawrence G. McMillan is president of McMillan Analysis, a registered investment and commodity trading adviser. McMillan may hold positions in securities recommended in this report, both personally and in client accounts. He is an experienced trader and money manager and is the author of "Options As A Strategic Investment." www.optionstrategist.com

(c)McMillan Analysis Corporation is registered with the SEC as an investment advisor and with the CFTC as a commodity trading advisor. The information in this newsletter has been carefully compiled from sources believed to be reliable, but accuracy and completeness are not guaranteed. The officers or directors of McMillan Analysis Corporation, or accounts managed by such persons may have positions in the securities recommended in the advisory.

-Lawrence G. McMillan

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November 29, 2025 11:40 ET (16:40 GMT)

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