The stock market is off and stumbling this year with the SPX sitting at 6940 today on Martin Luther/Don/Rodney/Billie Jean King Day. I Have A Dream. US markets are closed today and will reopen tomorrow. The 5-month parade through the 6550-6950 range is tested at the top side. The neggie d spankdown is in progress on the daily chart above. The weekly chart is also negatively diverged across all indicators so a multi-week down move should begin. The SPX has wanted to roll over for the last month but the happy AI and rate-cut talk keeps the party going.
The daily chart above shows price dropping to the 20-day MA, now at 6909, and bouncing, but then finishing last week soggy into the 3-day weekend. Stocks are usually up the 2 days leading into a 3-day holiday weekend. This is why professional traders bot that low at the 20-day. Interestingly, today the new moon peaks for the month and stocks are usually soggy moving through the new moon. S&P futures are trading and down -80 points due to King Donnie's tantrum over taking Greenland.
The new moon is the darkest time of the month. Thus, an attack on Iran, or other covert missions, even law enforcement and troops going in to settle Minnesota, would be on the table. The overnight period is pitch black with the new moon so he who has superior night vision, wins. That would be the United States and/or law enforcement on the home front. There will likely be drama on tap in the Middle East and elsewhere over the next few days as a military units would take advantage of the new moon.
Anyhoo, the orange one said in a letter to Norway that he was pouting over not receiving the peace medal from the committee that is based in Norway so he seeks vengeance and revenge against Greenland. It's hilarious. No matter what he says, Donnie wants the rare earth elements in Greenland just like he wants the oil in Venezuela. He must be getting ready for World War III and Great Depression II, that he, humorously, is bringing on quicker himself. You have to laugh at it. Why not?
Futures are taking the pipe but today has to play out. King Donnie may spew something that soothes troubled minds, then again, he may inflame them worse. He will be in Davos this week, where the billionaires tell the millionaires how to live. Trumpski travels the world over the last year as Americans cannot afford to pay their bills or eat.
New money flows into the stock market to start a new year and that helps create buoyancy in equities. Everyone is back at work now as the 2026 grind begins. Nothing has changed. The daily chart remains in neggie d as the red lines show, the red rising wedge is bearish, stochastics are overbot agreeable to a pullback, and price is extended above the moving average ribbon needing a mean reversion lower. All that is a pile of dung.
The ADX is down to a pitiful 11 and the last inkling that the trend higher in stocks was an actual strong trend higher was back in September and early October. This last 5 months is a nothing burger so do not be surprised when it retraces.
The Aroon continues to show that the bullish party is in full swing. Bump. Whazzat? What? Did you feel that? (woman screams in the background) That bump? We hit an iceberg!! Quick, find a woman's coat and babushka to wear as a disguise and climb into a life raft to try and save your sorry arse. The green line remains overbot so all the bulls still believe stocks will go up forever. The Aroon red line remans oversold also believing that stocks will go up forever. Will they feel that way if the sogginess in the futures remain, or will they all run for the exits at once? Everyone remains super bullish as futures tank.
Everything on the chart above is negative and bearish. The Donnie drama may be the catalyst to push the whole pile of garbage over the hill. Money flow prints a lower low. Keystone looked at a few key metrics that gauge cyclical bull versus bear markets and those levels are from -7% to -9% lower, so it is feasible to see a full-blown correction of -10% or more coming over the next few weeks.
As a guesstimate of what is on tap, putting the Donnie Greenland temper tantrum drama aside, the expectation would be a drop in the SPX this week of a couple hundo points, then the week after a drop of about 200 to 400 points, then the week after that another drop of a hundo or 2 hundo points. Over the next 3 or 4 weeks, the expectation is for a drop in the SPX of from 200 to 1,000 points. That will surprise everyone since 100% of Wall Street analysts and strategists, like the Aroon above, say stocks will go up forever. The Donnie drama may be the catalyst that sends it all to Hell. S&P futures are almost down a hundo already.
So there should be lots of excitement ahead. Keybot the Quant remains long but is champing at the bit to go short after volatility failed this morning. Stocks will continue falling unless the VIX falls back below 16.87. Bears need the VIX to remain above 16.87 while at the same time pulling XLF below 54.30. This will be enough to create and continue downside momentum. If UTIL, or DJU, falls through 1065, look out, a crash would be on the table, at the least, stocks are going to drop noticeably.
You see layoffs ramping higher again as Keystone explained in the Fall. Employees are sh*t-canned in October ahead of the holidays so as not to be accused of being a Scrooge. That is why layoffs were strong in October but slacked-off at the end of the year. Some job loss announcements in November-December were for prior layoffs but a few companies did can workers around the holidays not a good move. When business picks up again down the road, that company will have the reputation of being dirtbags that screw workers. As a boss, or owner, you have to be mindful that people have families and such, you treat them with respect and be honest with them, and now that it is January, you drop-kick them across the parking lot into the dumpster. Thank you for your service, now get the Hell out.
Here is an article by Keystone in 2019 explaining recessions to the millennials. The recession was on the come but kicked into gear with the COVID-19 pandemic, then it all was saved by Federal Reserve money-printing (monetary stimulus) and Congressional largess sending checks out to people (fiscal stimulus). Well, the party cash is spent and a recession is on the come again. A lot of you may have already experienced what is described in the article and others can imagine what may be in store for them this month. If you are charging all your time to a billable number on the timecard to projects, you are fine, if you are charging overhead on your time slip, you are toast. Ask the boss for other duties or tasks if you are not busy; that may be enough for him to put down the scythe when he walks past your cubicle this month.
The Federal Reserve chairman reality television show continues. Rick Reider was kissing Donnie's butt over the weekend still vying for the job. Trump says he wants kiss-*ss Hasssett to stay at the Whitehouse that is a surprise but it may be more baby games. Hassett quickly agrees with his master. Hit me harder, daddy. The reason Trumpski attacked Powell is because he knows that the Fed is not going to lower rates at the end of the month, so he is stirring the pot to try and move the Fed that way. Isn't it sickening stuff? Drama from the 80-year old orange-headed baby man-child.
Now Trumpski is asking Dictator Putin to join the peace process in Gaza. The hits keep coming. Hilarious stuff. Donnie says hey Vlad, kill a few more women and children and then stop over so we can discuss peace and rebuilding in Gaza, then you can get back to killing some more women and children, and do not forget to target the elderly, too. What happened to ending the Ukraine War in 24 hours? That was a year ago. It was lies. Jackass talk.
All of you young folks will have your own song for the coming troubled times. Back in the early 1980's recession, the worst economic times since the Great Depression, we adopted The River. To this day, it cannot help but bring a tear to the eye. So many lives hurt and destroyed during that recession. Those memories come back to haunt me, they haunt me like a curse. All those things that seemed so important, they just vanish into the air. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added on 1/20/26 at 2:32 PM EST: SPX drops to 6796 a 67-handle. Whoopsies, daisies.
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