The Insider Report: Santa Claus is Coming to Town (for Bulls)

Market Overview

It looks like Santa Claus is firing up his reindeer and sleigh, as stocks finished last week on a very strong note. Consumer discretionary led the way, and so did the Nasdaq, which finished up 0.48% on the week. The S&P 500 was up 0.10%, while the Dow Jones Industrial Average was 0.67%. Markets will close early on Wednesday for Christmas Eve, and be closed completely on Thursday for Christmas day. Then, the Santa Claus rally period begins. It looks like it's starting a bit early, however, based on the price action we have coming into this week.

Stocks I Like

Horizon Bancorp (NASDAQ:HBNC) – 56% Return Potential

What's Happening

Horizon Bancorp, Inc. (HBNC) is a leading regional bank holding company operating Horizon Bank, providing a full range of commercial and retail banking services, wealth management, and treasury solutions across the Midwest, offering investors exposure to the rapidly growing community and regional banking sector with a focus on customer-centric relationships and local market expertise.
The last quarter showed revenue of $70.43 million and earnings of $77.14 million.
This valuation on HBNC is decent with its Book Value coming in at 12.90.
From a technical standpoint, HBNC recently broke out from a saucer formation that points to an acceleration up to higher prices.

Why It's Happening

Horizon Bancorp Inc. is emerging stronger from a transformative balance sheet repositioning in 2025, exceeding expectations through strategic asset sales, a successful $98.6 million common stock offering, and $100 million subordinated notes issuance. This overhaul has fortified capital levels, enhanced earnings power, and positioned the company for accelerated organic growth and potential M&A opportunities in its core Midwestern markets.
Expanding net interest margin signals improving profitability for Horizon Bancorp. Achieving expansion for the eighth consecutive quarter and pushing above 4% by September 2025 reflects prudent liability management and asset repricing, creating a resilient earnings foundation that thrives in varying rate environments and supports sustained shareholder value creation.
Strong commercial loan growth drives Horizon Bancorp’s core banking momentum. Organic increases, including $117.2 million in Q2 2025 alone, highlight deepening relationships with in-market businesses across diverse industries, tapping into regional economic revitalization and building a high-quality portfolio that fuels recurring revenue in a competitive lending landscape.
Excellent credit quality provides a defensive edge for Horizon Bancorp amid economic cycles. Maintaining minimal net charge-offs and stable asset metrics underscores disciplined underwriting and risk management, reinforcing its reputation as a reliable community bank partner capable of navigating challenges while delivering consistent performance for depositors and investors.
Analyst Ratings:
- Stephens & Co: Overweight
- Piper Sandler: Neutral

My Action Plan (56% Return Potential)

I am bullish on HBNC above $15.50-$16.00. My upside target is $28.00-$30.00.

SkyWater Technology (NASDAQ:SKYT) – 82% Return Potential

What's Happening

SkyWater Technology, Inc. (SKYT) is a leading U.S.-based pure-play semiconductor foundry providing advanced development, manufacturing, and packaging services for specialized technologies including radiation-hardened, mixed-signal, and MEMS integrated circuits, offering investors exposure to the rapidly growing semiconductor fabrication and defense/aerospace sector with a focus on domestic innovation and trusted supply chain solutions.
The company had $150.74 million in revenue the last quarter along with $11.49 million in earnings.
Valuation is very strong on SKYT, especially for a chip stock. P/E is at 6.28, Price-to-Sales is at 2.28, and EV to EBITDA is at 7.08.
From a technical standpoint, SKYT is consolidating within a rare diamond formation. These are powerful patterns that can lead to big rallies if the upper trendline gets taken out to the upside.

Why It's Happening

SkyWater Technology Inc. is emerging as a key player in U.S. semiconductor onshoring, leveraging its DOD Trusted foundry status to secure critical roles in aerospace, defense, and advanced compute markets. The strategic acquisition of Fab 25 in Texas and proposed CHIPS Act funding up to $16 million signal a transformative expansion of domestic production capacity, positioning the company to meet escalating demand for secure, homegrown chip supply amid global supply chain resilience priorities.
Record-breaking financial performance highlights SkyWater’s accelerating growth trajectory, with Q3 2025 revenue reaching $150.7 million—driven by higher-than-expected contributions from the new Texas facility and robust wafer services. This momentum, paired with strong gross margins from advanced technology platforms, creates a compelling narrative of scaling operations and transitioning toward sustained profitability in a high-demand specialty foundry landscape.
Leadership in quantum computing innovations unlocks vast future potential for SkyWater. Multi-million-dollar collaborations, including partnerships with QuamCore for Single Flux Quantum devices and ongoing engagements in hybrid quantum-classical systems, establish the company at the forefront of scalable quantum technologies—tapping into emerging markets that could redefine computing performance and drive premium revenue streams over the coming decade.
Government incentives and defense alignments provide SkyWater with a fortified moat and long-term visibility. As a Category 1A Trusted Supplier participating in DOD programs and benefiting from CHIPS Act support for facility modernization, the company is ideally placed to capture value from national security initiatives and policy-driven investments in domestic microelectronics, fostering resilience against geopolitical risks and cyclical downturns.
Analyst Ratings:
- TD Cowen: Buy
- Piper Sandler: Overweight
- Needham: Buy

My Action Plan (82% Return Potential)

I am bullish on SKYT above $13.50-$14.00. My upside target is $30.00-$32.00.

UiPath (NYSE:PATH) – 62% Return Potential

What's Happening

UiPath Inc. (PATH) is a leading enterprise automation software company providing an end-to-end platform for robotic process automation (RPA) and AI-driven agentic automation, enabling organizations to automate repetitive tasks and enhance productivity, offering investors exposure to the rapidly growing automation and artificial intelligence sector with a focus on innovative, scalable business process solutions.
The last quarterly report had revenue of $411.11 million and earnings of $85.17 million.
Valuation in PATH is a bit steep. P/E is at 38.47, Price-to-Sales is at 5.68, and EV to EBITDA is at 289.61.
From a charting point of view, PATH is seeking a resolution from its broadening wedge formation. These are powerful patterns that can lead to explosive moves to the upside.

Why It's Happening

UiPath Inc. is transforming enterprise automation with its agentic AI platform, achieving a landmark first GAAP-profitable quarter in Q3 fiscal 2026 while revenue surged 16% year-over-year to $411 million. This breakthrough profitability, coupled with accelerating adoption of AI-powered agents, positions UiPath as a frontrunner in addressing complex workflows that traditional RPA couldn’t touch, unlocking massive efficiency gains for enterprises navigating the AI era.
Explosive growth in annual recurring revenue fuels UiPath’s scalable business model, with ARR reaching $1.782 billion—an 11% increase—supported by a 107% dollar-based net retention rate as customers expand usage into agentic automation. This recurring revenue flywheel, enhanced by tools like Agent Builder and Maestro orchestration, creates a sticky ecosystem that drives predictable expansion amid rising demand for intelligent process automation.
Strategic AI integrations and partnerships amplify UiPath’s market momentum, including deepened collaborations with Microsoft for Copilot interoperability and Veeva for AI-driven quality management. These alliances accelerate deployment of agentic solutions across industries like healthcare and insurance, generating real-world savings—such as $32 million projected over three years for one client—while establishing UiPath as an essential orchestrator in the agentic AI revolution.
Innovation in agentic automation differentiates UiPath in a crowded field, enabling autonomous agents to handle adaptive, end-to-end processes with features like visual canvases and natural language interfaces. As enterprises shift from pilots to production-scale deployments, UiPath’s unified platform—combining robots, AI agents, and human collaboration—captures value from the projected explosion in agentic workflows, setting the stage for outsized growth in 2026.
Analyst Ratings:
- RBC Capital: Sector Perform
- Morgan Stanley: Equal-Weight
- DA Davidson: Neutral

My Action Plan (62% Return Potential)

I am bullish on PATH above $13.50-$14.00. My upside target is $26.00-$27.00.

Market-Moving Catalysts for the Week Ahead

Legal Risk Threatening Stocks?

The U.S. Supreme Court’s impending ruling on President Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs could significantly impact financial markets.

Currently, expectations are pointing to a ruling in early 2026. A ruling against the administration might invalidate tariffs on imports from numerous countries, potentially triggering refunds of $168–200 billion already collected, boosting importer cash flows and easing supply chain pressures but creating fiscal uncertainty and possible market volatility from disrupted trade policies.

Conversely, upholding the tariffs would maintain higher import costs, supporting domestic industries yet risking inflationary pressures and retaliatory measures abroad. Markets remain on edge, with contingency plans discussed for alternative tariff authorities if the current ones are struck down. This is a big wild card for markets right now.

Is Santa Coming to Town?

I want to take a moment to dispel some of the myths surrounding the Santa Claus rally period, which starts this week. This period refers to a seasonal tendency for stock markets to rise during the last five trading days of December and the first two trading days of January, spanning seven trading sessions around the year-end holidays (markets are typically closed on Christmas and New Year’s Day).

It was coined by Yale Hirsch in the 1972 Stock Trader’s Almanac, and this phenomenon has historically delivered positive returns for the S&P 500 about 76-80% of the time since 1950, with an average gain of around 1.3%.

Factors contributing to it include holiday optimism, lower trading volumes from institutional investors on vacation, year-end tax-loss harvesting followed by reinvestments, and anticipation of the January effect, though it does not occur every year and past performance offers no guarantees. Markets close early on Wednesday this week and are fully closed on Thursday – then, the fun begins!

Sector & Industry Strength

There's quite a bit of congestion taking place at the sector level since the start of the fourth quarter, but if you look at the indices and how they've basically done nothing in 3 months, it's not that surprising.

Healthcare (XLV) is still at the top of the pack, followed by financials (XLF) and basic materials (XLB). There was a notable pop in the consumer discretionary (XLY) sector last week, which is a bullish signal.

At the bottom, we still see more defensively oriented sectors like real estate (XLRE), utilities (XLU), and energy (XLE). The market doesn't seem to be all that concerned with inflation right now, which opens the door for more growth to take hold.

1 week	3 Weeks	13 Weeks	26 Weeks
Consumer Discretionary	Financials	Healthcare	Technology

Editor's Note: Growth signals are growing.

Regional Bank Comeback? (Sector ETF: KRE/XLF)

There's been some incredible price action taking place in the financials sector. Numerous big banks have broken out to new all-time highs, with some like Bank of America finally recovering all their losses from the Global Financial crisis.

But there's something even bigger going on underneath the surface, and it has to do with regional banks. The steepening yield curve comes into play with this ratio, as regional banks have more traditional lending operations compared to the biggest banks.

Over the past few years, regional banks (KRE) have underperformed the broader financial sector (XLF). But now we just formed a higher-low on the ratio, and if it breaks above the downward sloping trendline, we could be entering a period where regional banks outperform within the broader financial sector.

Danger in Tech Land (Sector ETF: XLK/SPY)

The market's most important sector, technology (XLK) has been lagging over the past couple of weeks. Without tech's participation, and most important, its outperformance, we're going to be stuck in a hard-dollar environment in stocks.

This makes it a great time to check back in on the ratio between the tech sector (XLK) and the S&P 500 (SPY). As you can see, a clear uptrend has been in effect for years. The ratio keeps making higher-highs and higher-lows, and if you've been overweight tech, you've outperformed.

The ratio broke out from a wedge formation back in September, and has since come back down to retest former-resistance-turned-support. If it holds here, then tech has a shot to resume outperformance, but if we had a false-breakout, then risks are starting to rise at the index level.

Inflation Still Under Control (Sector ETF: TIP/IEF)

We have a divided Fed at the moment that can't seem to make up its mind in terms of whether unemployment or inflation is the bigger risk. I would like to direct their attention to the bond market for the correct answer.

We're looking at the ratio between Treasury Inflation Protected Securities (TIP) and 7-10 Year Treasuries (IEF). This tells us exactly what the bond market thinks in terms of inflation, and whether it's a rising risk at the moment or not.

The ratio hasn't hit a new high in years. If anything, it's been consolidating within a multi-year triangle formation, which warns that inflation could eventually return. But it's simply not a dangerous macro factor at the moment. This leaves the door open for more rate cuts in 2026.

My Take:

Inflation's containment has a lot to do with the price of crude oil. Prices look to be breaking key technical support, and it's going to keep a lid on inflation until proven otherwise. This provides a pathway for interest rates to drop.

If anything, the bigger risk would be the Fed not cutting soon enough to meet the market's demands. The yield curve is steepening big time and it's pricing in economic growth. At some point, inflation will become a big problem again, but we're just not at that point in time.

Cryptocurrency

There's been some noteworthy price action in Ethereum over the past couple of weeks. Prices completed what could be another lower-high after being rejected once again at the 3200-3300 resistance zone.

But, as prices have dropped again, they found some support in the 2600-2800 zone, and are trying to complete another higher-low. The corrective downtrend remains intact ever since Ethereum topped out in August, but this could be the first step in bulls regaining some momentum.

Right now, Ethereum is in a neutral zone above support at 2600-2800 and below resistance at 3200-3300. If resistance breaks, a rally up to 3800-3900 could follow. If support breaks, a drop to 2100-2200 could follow. It's best to wait until it breaks in one direction or another.

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