SPX Trade Plan — January 6, 2026
The first three trading days of the year have been anything but dull. While the SPX is up a measly 0.32%, we are seeing significant outperformance in broader market segments: RSP is up 1.3%, small caps via IWM have gained 2.32%, and ARKK has surged 4%. All this to say, while the Mag7 names are lagging, there is substantial strength in individual names and high-beta sectors.
We are seeing a clear risk-on appetite from institutions to start the year, which is setting the initial trend. The critical question is how much longer this positioning persists. Back in October, the narrative centered on a “1999-type melt-up”—a sentiment that was briefly paused by year-end profit-taking and rebalancing. Now, we must determine if this is the early innings of a euphoric extension or simply a short-term burst of start-of-year positioning that may fade in the coming days.
Current market valuations, specifically the Shiller CAPE ratio, recently crossed 40 for only the second time in history (the first being December 1999), putting the current market in a rarefied and potentially speculative state.
For today’s trading, we want to see if buyers or sellers prevail around the 6900 level.
GEX Profile
Execution Levels
Long Plan
- Reclaim: A test and hold of 6910 sets up 6914, 6920, 6928, and 6932.
- Continuation: A break through 6932 targets 6937, 6945, and 6950.
- Stretch: Through 6950 could trigger a gamma-induced squeeze toward 6980. Since we are in ATH territory, look for 6962, 6965, 6971, and 6975 as interim targets.
- Dip Buys: Major support remains at 6875.
Short Plan
- Breakdown: A break below 6894 targets 6875, with intermediate levels at 6888, 6884, and 6881.
- Flush: A failure of 6775 (structural support) opens the door to 6868, 6862, 6856, 6852, 6849, and 6844.
- Short Pops: Looking to fade strength near 6920.