Market Insights: Monday, January 12th, 2026

Market Overview
US stocks edged to fresh record highs on Monday as investors cautiously looked past intensifying political pressure on the Federal Reserve and turned their attention toward this week’s critical inflation data. The Dow Jones Industrial Average rose 0.2% to close at another all-time high, while the S&P 500 also gained 0.2% to notch a fresh record. The Nasdaq Composite added 0.3%, supported by steady buying in large-cap technology after an early-morning selloff reversed by late morning. Markets opened sharply lower as headlines escalated around the independence of the Federal Reserve, but buyers steadily stepped in as the session progressed, reinforcing the underlying strength of the trend. Gold and silver surged to new record highs as investors sought safe-haven exposure amid uncertainty surrounding monetary policy and political interference, while bonds slipped and the US dollar weakened. Tensions escalated after Federal Reserve Chair Jerome Powell confirmed that the Justice Department had subpoenaed the Fed, raising the possibility of criminal charges related to his testimony on building renovations. In a strongly worded statement, Powell framed the investigation as an escalation of President Trump’s efforts to pressure the central bank into cutting interest rates, stating that the threat of criminal charges stemmed from the Fed’s commitment to setting policy based on economic data rather than political preference. Corporate sentiment was mixed, with financial stocks under pressure after President Trump warned that credit card issuers would be in violation of the law if interest rates were not capped at 10%. Shares of Capital One dropped sharply, while Citi and JPMorgan also traded lower ahead of the start of bank earnings season. Despite these crosscurrents, equities held firm as investors prepared for Tuesday’s Consumer Price Index release, which is expected to show inflation pressures remained steady in December. Markets are overwhelmingly pricing in no rate cut at the Fed’s upcoming meeting, following last Friday’s jobs report that showed continued labor-market cooling without signaling a sharp economic slowdown.

SPY Performance
SPY finished the session modestly higher, continuing its steady grind to new highs. The ETF opened at $690.71, traded in a tight range throughout the day, and closed at $695.17, up 0.17%. The intraday high reached $696.09, marking a new all-time high, while the low held near $690.66, reinforcing firm demand on dips. Trading volume totaled 59.64 million shares, slightly below average, reflecting consolidation rather than aggressive chasing at elevated levels. Price action followed a familiar pattern of brief upside pushes followed by sideways absorption, signaling controlled bullish continuation rather than exhaustion.

Major Indices Performance
Performance across the major indices reflected broad but measured strength. The Nasdaq gained 0.26%, supported by selective buying in technology. The Dow rose 0.17%, closing at another record, while the S&P 500 also finished higher to extend its streak of all-time highs. The Russell 2000 added 0.48%, indicating improving participation among small-cap stocks even as investors remain selective.

Notable Stock Movements
The Magnificent Seven delivered a mixed session, with roughly half of the group finishing higher. Tesla led the upside with gains of up to 0.88%, while the weakest performer was Meta, which fell as much as 1.71%. The split performance reflected rotation rather than broad risk reduction, and leadership weakness did not align across both megacap technology and crypto, a combination that would typically signal deeper market stress.

Commodity and Cryptocurrency Updates
Commodities sent a powerful signal beneath the surface. Crude oil rose 0.92% to $59.48, continuing the rebound our model has been forecasting for several months. While further downside remains possible, holding above $56 keeps the door open for a move toward $60 and potentially $70. Gold surged 2.24% to $4,601, extending its historic rally as investors sought protection against policy uncertainty and inflation risk. Bitcoin rose 0.60% to close above $91,200, signaling steady risk appetite in digital assets despite equity market caution.

Treasury Yield Information
The 10-year Treasury yield fell 0.43% to close near 4.169%, easing financial conditions and helping support equity prices. In our framework, yields above 4.5% begin to pressure stocks, while sustained trade above 4.8% often coincides with sharper selloffs. A move above 5% historically signals significant equity risk, with a 20% or greater correction becoming likely near 5.2%. Monday’s decline in yields provided a modest tailwind ahead of CPI.

Previous Day’s Forecast Analysis
In Friday’s newsletter, we emphasized that above $690 the bulls remained firmly in control and that consolidation or shallow pullbacks would likely attract buyers rather than signal trend exhaustion. We highlighted $692 as a key level bulls would aim to defend early in the week.

Market Performance vs. Forecast
Monday’s action aligned with that outlook. SPY held above $690 throughout the session, absorbed selling pressure efficiently, and pushed to new all-time highs without a meaningful breakdown attempt. The absence of downside follow-through confirmed that bullish control remains intact.

Premarket Analysis Summary
In Monday’s premarket notes published at 7:22 AM, SPY was trading near $690.31 with upside targets at $692, $695, and $696.50, and downside levels at $689.50 and $687. We noted that if SPY could reclaim and hold above the $692 bias level, upside repair was likely, while dips toward lower targets were expected to attract buyers.

Validation of the Analysis
The intraday tape validated the premarket framework. SPY found support near $689 early, reclaimed $690, and ground higher through the session, eventually pushing to new highs. Selling pressure remained muted, and buyers controlled the tape for most of the day.

Looking Ahead
Attention now turns squarely to Tuesday’s CPI release, followed by PPI and Retail Sales on Wednesday and Unemployment Claims on Thursday. Inflation data will be critical in shaping near-term expectations for monetary policy amid heightened political scrutiny of the Fed.

Market Sentiment and Key Levels
Sentiment remains bullish but cautious ahead of CPI. SPY’s close near $695 keeps price firmly above the $685 bull-control level. Resistance sits at $697, $699, $700, and $703, while support rests at $694, $690, $688, and $686. Holding above $690 keeps momentum intact, while a sustained break below $688 would open the door to a deeper pullback.

Expected Price Action
SPY’s projected maximum range for Tuesday is $691 to $700. The Call side dominates in a narrow band, signaling choppy action with brief trending moves. CPI has the potential to quickly shift conditions, increasing volatility in both directions.

Trading Strategy
We continue to favor buying dips near $690 on confirmed support and remain cautious about chasing strength into the $700 level. Shorts are only favored below $688 or on failed breakouts above $699. With CPI imminent, discipline and flexibility are essential.

Model’s Projected Range

SPY’s projected maximum range for Tuesday is $691 to $700, with the Call side dominating in a narrow band that signals choppy action with brief trending moves. CPI is released tomorrow and could change conditions quickly. Today SPY rallied 0.16% after being down more than 0.5% overnight. Bulls once again bought the dip, exactly as expected. SPY made a new all-time high at $696.06 and a new closing high at $695.16. There was no news driving the move. This was pure trend continuation. Price remains well above $685, keeping bulls firmly in control. With $700 in sight, higher prices remain likely. Volume was below average, which does not strongly support these elevated levels. Overnight SPY recovered from an early gap down. Price found support at $689 and ground higher from there. By the open SPY was back above $690 and bears were absent. Price stalled near $693.50 for over an hour. Liquidity was absorbed and SPY pushed higher again. It stalled again near $694.50. The session followed a familiar pattern of quick pushes and sideways consolidation. New highs were reached before 3 pm. A small pullback into the close did not change the bullish structure. Overnight bulls will try to defend $694 to keep momentum strong. A dip to $690 is likely the lowest bulls want to see. A failure at $690 likely tests $688. A sustained break below $688 opens the door to $686 and possibly a return to the $675–$685 range. Bears only gain real traction below $680. Holding above $690 keeps the path open to further highs. Tuesday is likely choppy but also volatile due to CPI. Geopolitical risks remain present. Resistance sits at $697, $699, $700, and $703. Support sits at $694, $690, $688, and $686. We favor buying dips near $690. We only favor shorts below $688 or on failed breakouts above $699. Crypto was mostly flat and MAG stocks were mixed. Broad weakness in both groups would be needed for a larger pullback. VIX rose 4.35% to 15.12 but still confirms a risk-on environment. SPY remains in the lower portion of a strong bull trend with structural support near $681.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the session in a Bullish Trending Market State with SPY closing above resistance turned support. Extended targets printed for much of the session, starting late morning and continuing into the close. The MSI rescaled lower overnight on the gap down but moved to a ranging state by the open and then rescaled to its current bullish state by 10 am. For Tuesday the MSI is forecasting continued strength and new highs with support at $694.40 and lower at $693.07.
Key Levels and Market Movements:
Friday we stated, “The trend remains bullish in the short term.” We also said, “We will not consider shorts unless price breaks below $690 or tests $697.” We added, “Dips toward $690 and $685 should attract buyers.” With that context, and with the MSI opening in a ranging state, patience was required. We typically avoid trading a ranging MSI. By 10 am the MSI rescaled to a bullish state. That put longs in play at MSI support. The MSI has a better than 70% win rate after bullish or bearish rescaling when trading MSI support or resistance levels. The strategy was simple. Buy MSI support near $693. Trade to MSI resistance and trail using either the MSI or premarket report levels. Extended targets printed all day and we do not fade extended targets. There was little else to do in this session given extended targets printed all day. Had you read the MSI properly, one nice long trade with a big trailer and you would be green on the day, thanks to having a clear plan, maintaining patience and discipline, and staying aligned with MSI signals, market structure, and our broader trading framework. The MSI continues to prove its reliability as the cornerstone of our trading process.
Trading Strategy Based on MSI:
Tuesday has CPI which certainly can move the market. After more than a week of strong gains, price action is likely to chop a bit and perhaps show brief weakness. This does not mean the top is in. It just means the market needs some time to consolidate. The trend remains bullish in the near term and we favor the bull trend with SPY above $685. We will not consider shorts unless price breaks below $688 or tests $699. Macro risks remain, so traders should stay alert to headlines. The MSI continues to forecast strength. Upside resistance sits near $700. Dips toward $690 should attract buyers. There is no meaningful bear case unless price falls below $680. Bulls will defend $694 with a failure there likely sending SPY to $690. A break of $690 opens a move back into the $675–$685 range. If support holds, bulls will push toward $698 and then $700. Gains above $698 may stall until $700 is cleared. The long-term bull trend remains intact above $640. Near term control stays with the bulls above $685. Failed breakouts near $699 can be shorted with caution. Long setups are favored on pullbacks into support. As always, stay alert to macro risks and be prepared to trade what you see. Failed breakouts and failed breakdowns continue to offer the highest-probability setups, so remain flexible, avoid trading during Ranging Market States, and ensure all trades are fully aligned with MSI signals. Providing real-time insights into market control, momentum shifts, and actionable levels, the MSI when integrated with our Pre-Market and Post-Market Reports continues to sharpen execution precision and elevate trade quality. If you haven’t yet integrated MSI and our model levels into your process, now is the time. Contact your representative to get started as these tools are designed to support consistency and enhance performance.

Dealer Positioning Analysis

Summary of Current Dealer Positioning:
Dealers are selling SPY $697 to $718 and higher strike Calls while also buying $696 Calls indicating the Dealers’ desire to participate in any continuation of today’s rally on Tuesday. Dealers are no longer selling ATM Puts. The ceiling for tomorrow appears to be $700. To the downside, Dealers are buying $695 to $645 and lower strike Puts in a 2:1 ratio to the Calls they’re selling/buying displaying no concern that prices could move significantly lower. Dealer positioning is changed from neutral/slightly bearish to neutral/slightly bullish.
Looking Ahead to Friday:
Dealers are selling SPY $696 to $720 and higher strike Calls while also buying $696 Calls indicating the Dealers’ desire to participate in any rally this week. The ceiling for the week appears to be $705. To the downside, Dealers are buying $695 to $585 and lower strike Puts in a 3:1 ratio to the Calls they’re selling/buying, reflecting a market that is not concerned about lower prices. For the week Dealer positioning is unchanged from neutral/slightly bearish to neutral/slightly bearish. We advise reviewing Dealer positioning daily for directional clues. These positions evolve quickly and tracking them is essential for staying ahead of shifting market sentiment.

Recommendation for Traders
Into Tuesday, respect the bullish structure but remain patient ahead of CPI. Favor longs on pullbacks toward $692–$690 and limit shorts to failed breakouts near $699–$700. With volatility likely to increase around the inflation data, trade what you see, manage risk aggressively, and stay flexible.

Good luck and good trading!