SPX Trade Plan — January 7, 2026

The insatiable bid in high-beta stocks persists, with participation expanding across more sectors and themes. Yesterday, this broadening breadth helped the SPY gain 0.59% and the DJI climb 0.99%. Meanwhile, the “freedom rally” in RSP and IWM continued their outperformance, gaining 1.2% and 1.3% respectively, signaling robust market health and expansion.

This rally appears to be just heating up. If mega-cap tech—specifically the lagging Mag7—finds its footing, we will likely see SPY begin to deliver outperformance and a significant push toward the next major psychological milestone at 7000.

Remember, throughout December our thesis focused on consolidation; during the final week, we identified the potential for a breakout. Breakouts following extended periods of consolidation, such as the one seen in the S&P 500 from September through year-end, are typically significant in both direction and duration.

For today’s trading, we are looking for SPX to backtest lower and fill out volume in the 6920–6950 range. This would represent a light, healthy pullback to establish a higher base for the next leg up.

Long Plan The ideal long scenario involves a backtest and hold of established support levels.

Execution Levels

Long Plan

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Short Plan

• Breakdown: A break below the gamma flip at 6940 targets 6932, 6926, and 6920. A further loss of 6918 targets 6914, 6910, 6900, and 6894.
• Flush: A breakdown below 6894 triggers a deeper push toward 6875, with intermediate levels at 6888, 6884, and 6881.

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