Who’s Left To Buy The ATH Breakout?
The S&P closed up 1.09% on the week and at record highs on after a positive response to the labor report which came in with mixed results.
The unemployment rate fell from 4.6% to 4.4% but the non farm payroll number expected at 60k came in light at 50k jobs which we know the Fed will revise down by 60k jobs to a -10k.
Our threat to the base case would have been a labor report that was too hot for the Fed to cut, or a suggestion of wage price spiral impacting inflation.
Neither of these two threats materialized, and additionally, the ISM services PMI indicated strengthening employment and prices paid coming down.
However… if its not one thing with the market, its another.
Tariff Decision Gets Punted
The supreme court was supposed to issue a ruling on Friday morning, but did not release comment.
For now, the release has been updated to January 14th, this Wednesday.
Odds suggest that the tariffs will be ruled against based on both Polymarket and Kalshi.
Logically we might think that if tariffs are ruled against, the market will see this as a deflationary impulse, which may encourage the Fed to keep cutting rates to guarantee that the labor market does not break.
As of Friday, Fed odds for a pause in the next January 28th meeting have risen to 95% and markets are pricing in two cuts through the end of the year.
Its almost comical how this works, but last weekend we noted:
In April everyone was a tariff expert. Just last week, everyone was a silver expert. This week, looks like everyone is a crude oil expert!
Well, looks like everyone’s back to being a tariff expert, so I’ll put my expert hat on too…
… not. I’ll be letting the charts lead the way. If you’re intent on trying to trade the headline, I would have a chart of the /ZN and SPY side by side and see how the market responds in real time.
- If its a true deflationary impulse, the /ZN should be bid sending rates down and the SPY higher.
- If the market doesn’t care, /ZN will be unchanged, and the SPY will trade freely.
- If /ZN is bid, and the SPY is struggling, it really just comes down to the idea that everyone is already fully invested.
NAAIM survey suggests that managers are already fully invested, and very rarely does the mean move over 100.
Over 100 would suggest that managers are moving from fully invested to leveraged longs. The highest its been was 120.56, on December 13th, 2017.
On a tariff ruling that might make logical sense as being bullish, let’s not try to outsmart what is actually going on with price, and positioning.
Trade the chart.
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Broad Market Analysis
SPY – Weekly
Bears hate this one simple trick. A fib extension suggests a measured move from the breakout of about 730. Not suggesting we go there this week, or even next, but we have a breakout.
If this 689 level fails, I would be concerned about weekly equilibrium resuming and seeing those fully invested managers unwind some of the long posture near highs.
SPY – Daily
Base case is for a higher lows to continue over the 689 level to keep bulls on parade and moving higher towards the ATH and beyond. Under that level 20 SMA is the line in the sand.
If thats failed, an equal low neutralizes the daily trend from up to flat.
SPY – Hourly
Pathing favors some form of higher low or continuation. The 20 SMA in orange as line in the sand is where the bears ruin the bull party.
Shorts can be had at the ATH area as short term trades only on failure patterns into blue sky. Think pullback before “crash.”
Market Internals – NYSE
Note that as the market balanced on Thursday, internals suggested positive exchange wide activity. Also asterisk * on Wednesday index score illustrates that it really wasn’t all that bad with the dump into the close.
Market Profile
Bulls keep value higher on Friday’s breakout session. Great excess on the low in B period as well dipping a toe straight into value from Thurs and taking off out of demand. Poorish high Friday with not much excess that could use some repair.
SPY vs QQQ Divergence
QQQ isn’t at ATH levels yet, but we saw this same divergence back in late summer 2025. So long as the QQQ isn’t actually in a downtrend, we’ll see if a Mag 7 resurrection can snap this back.
If you want the full take, including all of the nuance of breadth, risk appetite and much, much more, check out the weekend episode here:
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Top watches: $JPM, $GS, $MS, $TSM
Swing Stock Scans
ALB – Daily
Extended from the daily 50 SMA, however nice looking flag in a very clean uptrend.
AMKR – Daily
Similar to above, extended from daily 50 SMA, however, clean trend and tight consolidation. Ideally any pullbacks stay over 47.15 to keep this in play.
RVLV – Daily
Great bull flag in a strong uptrend with perfect Friday hammer off of 20 SMA. In play as long as the 20 SMA holds.
SBUX – Daily
Strong rounded base in play with a move to retake the moving average stack. Over 89.40 with acceptance should get going towards 97.90.
WMG – Daily
Clean inverted head and shoulders with a retake of the moving average stack to form the right shoulder. Looking for a neckline break to work its way towards the 34.30 prior resistance.