North American stock markets have tiptoed into December, contrasting a volatile month in November. With only a few weeks left on the trading calendar, investors are awaiting a potential Santa Claus rally to lift equities into the New Year.
CIBC Capital Markets chief market technician Sid Mokhtari says December is historically one of the strongest months for stocks. Of course, 2025 has yielded no shortage of surprises.
Technical analysis generally focuses on trends in a stock’s price and volume over time, as opposed to fundamental analysis, which uses factors such as a company’s financial statements and economic data.
In November, 10 stocks selected by Mokhtari’s “trend-spotting matrix process” returned 0.75 per cent, losing handily to the broader S&P/TSX Composite index (^GSPTSE), which returned 3.71 per cent.
Mokhtari says it looks like North American stocks will push higher in December, supported by his call for the U.S. Federal Reserve to cut its federal funds rate by 25 basis points at its Dec. 10 meeting.
“We are cautiously optimistic that a year-end rally is evolving,” he wrote in a recent research report. “The primary tailwind for equity indices heading into year-end is a sustained broadening of market participation beyond U.S. mega-cap stocks, accompanied by cyclical sector rotation.”
For December 2025, three of his TSX stock picks are from the materials sector, which has benefited immensely from soaring gold prices this year. Integrated oil giant Suncor Energy (SU.TO)(SU) also made the list, alongside smaller rival Whitecap Resources (WCP.TO), which has more exposure to natural gas.
On Monday, RBC Capital Markets weighed in on the question of a Santa Claus rally in 2025.
“None [of the months this year] have behaved the way they have seasonally,” Amy Wu Silverman, the bank’s head of derivatives strategy, told Yahoo Finance. “I don’t know if we’ll get that Santa rally, but we’ll definitely get perhaps another volatility pothole or rally in volatility.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist.
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