Market Insights: Wednesday, January 14th, 2026

Market Overview
US stocks retreated on Wednesday as technology shares led the market lower and early earnings-season optimism faded, pulling major indices further away from recent record highs. The Nasdaq declined roughly 1.0%, marking its weakest session of the year, while the S&P 500 fell about 0.5% and the Dow Jones Industrial Average slipped a more modest 0.1%. Selling pressure was most pronounced in megacap technology, where Nvidia, Tesla, Broadcom, and Oracle all moved lower, dragging on broader sentiment despite a generally supportive macro backdrop. Bank stocks also weighed on the market after Bank of America and Wells Fargo both reported strong quarterly profits driven by trading activity, only to see their shares fall alongside Citigroup, extending the earnings-season malaise that began with JPMorgan’s underwhelming results earlier in the week. On the macro front, investors digested wholesale inflation data that followed a mild consumer inflation report, reinforcing the view that price pressures remain sticky enough to keep the Federal Reserve on hold in the near term, while still allowing room for two rate cuts later this year. Political risk remained elevated as President Trump continued public attacks on the Federal Reserve, adding to uncertainty around central bank independence, while markets also awaited a potential Supreme Court ruling on the legality of Trump’s tariff authority after the court again declined to issue a decision. Precious metals extended a blistering rally, with gold and silver pushing to fresh record highs as investors sought protection against geopolitical tensions and policy uncertainty. Bitcoin surged sharply, reaching its highest level since November after US senators unveiled draft legislation aimed at establishing long-awaited regulatory clarity for the crypto industry. Overall, Wednesday’s session reflected a market shifting into digestion mode, with leadership under pressure, earnings risk rising, and investors increasingly selective near elevated levels.

SPY Performance
SPY experienced its sharpest decline of 2026 so far before staging a late-day recovery that cut losses nearly in half. The ETF opened at $690.87, briefly pushed to an intraday high of $691.71, and then sold off aggressively to a low of $686.13. Buyers stepped in repeatedly near that level, and SPY rallied into the close to finish at $690.41, down 0.48% on the day. Trading volume surged to 86.92 million shares, well above average, reflecting active two-way trade rather than passive drift. Despite the volatility, SPY held well above the critical $685 level that defines bull control, reinforcing the view that this move was corrective rather than trend-breaking.

Major Indices Performance
Wednesday’s losses were uneven across indices. The Nasdaq fell 1.00%, leading the downside as technology stocks came under sustained pressure. The S&P 500 declined 0.50%, reflecting weakness in both tech and financials. The Dow slipped just 0.09%, showing relative resilience as losses in growth-oriented components were offset by strength elsewhere. The Russell 2000 rose 0.77%, signaling continued interest in smaller-cap names and suggesting that the selling was more rotational than systemic.

Notable Stock Movements
It was a uniformly negative session for the Magnificent Seven, with all seven names finishing in the red. Meta led the group lower, falling as much as 2.49%, while weakness was broad across Nvidia, Apple, Tesla, Microsoft, Amazon, and Alphabet. The across-the-board decline in megacaps weighed heavily on the Nasdaq and underscored near-term fatigue in market leadership. Despite the selling, there were no signs of panic or disorderly liquidation, reinforcing the view that this was controlled profit taking rather than the start of a deeper unwind.

Commodity and Cryptocurrency Updates
Commodities and crypto delivered a mixed but informative signal. Crude oil fell 1.65% to $60.14 after recently reaching the $60 level our model has been forecasting for months. While additional downside is possible, holding above $56 keeps the door open for a renewed push toward $70. Gold rose 0.82% to $4,636, extending its historic rally as demand for hedges remained strong. Bitcoin surged 3.69% to close above $97,500, highlighting strong risk appetite in digital assets even as equities consolidated.

Treasury Yield Information
The 10-year Treasury yield dropped 0.67% to close near 4.143%, easing financial conditions and helping prevent equity weakness from accelerating. In our framework, yields above 4.5% create increasing headwinds for 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%. Wednesday’s decline in yields supported the late-day equity rebound.

Previous Day’s Forecast Analysis
In Tuesday’s newsletter, we emphasized that while pullbacks were likely after recent gains, bulls would remain firmly in control as long as SPY held above $685. We noted that dips toward $690 and $688 were likely to attract buyers and that volatility could increase around earnings and macro headlines.

Market Performance vs. Forecast
Wednesday’s session followed that framework closely. SPY broke below $690, tested $688, and briefly dipped toward $686 before buyers stepped in aggressively. The failure to sustain trade below those levels and the sharp rebound into the close reinforced the view that bulls continue to defend key support zones.

Premarket Analysis Summary
In Wednesday’s premarket notes published at 7:34 AM, SPY was trading near $691.65 with upside targets at $693, $693.50, $695, and $696, and downside levels at $691.50, $690, and $688. We emphasized patience and favored entries near support, noting that movement could be sudden and volatile.

Validation of the Analysis
The intraday tape validated that approach. SPY rejected early upside attempts, sold off into the identified downside targets, and found strong demand near $688 and $686. Multiple failed breakdowns ultimately triggered a sharp rebound into the close, rewarding disciplined dip buyers and confirming the reliability of the outlined levels.

Looking Ahead
Attention now turns to Thursday’s Unemployment Claims report, the final scheduled economic release for the week. With no major data due Friday or early next week, markets are likely to remain driven by earnings headlines, geopolitical developments, and technical levels.

Market Sentiment and Key Levels
Sentiment remains bullish but cautious. SPY continues to trade well above the $685 bull-control level, keeping the broader trend intact. Resistance sits at $690, $693, and $695, while support rests at $688, $685, $683, and $681. A sustained break below $685 would signal a deeper pullback, while holding above it keeps the path open for renewed highs.

Expected Price Action
SPY’s projected maximum range for Thursday is $683 to $697. The Put side dominates in a wide band, signaling trending action mixed with periods of chop. With limited scheduled catalysts, price action is likely to remain volatile and headline-sensitive.

Trading Strategy
We continue to favor trading with the trend. Long setups are preferred on pullbacks toward $688–$685 that show clear support. Shorts are only favored on a clean break below $686 without a fast recovery or on failed breakouts near $695. Two-way trading is likely, so fading extremes with disciplined risk management remains the preferred approach.

Model’s Projected Range

SPY’s projected maximum range for Thursday is $683 to $697. The Put side dominates in a wide band, signaling trending action with periods of chop. Thursday has Unemployment Claims and nothing else due the rest of the week. PPI came in as expected and Retail Sales were strong, but neither materially moved the market. Intraday movement continues to be driven by external macro events, with bulls repeatedly using dips as buying opportunities. While the market sold off today, it cut losses in half by the close and finished down 0.49% at $690.36, remaining well above the $685 level that defines bull dominance. Earlier it appeared SPY might return to the $675–$685 range, but lows just below $686 held on multiple tests and price rallied sharply, bouncing cleanly off the trend line from the April lows. This decline was the largest of 2026 so far, raising the question of whether it will hold, and early signs suggest the bulls are already buying. Overnight action set the tone, with SPY testing and holding $690 into the open as anticipated. Once that level broke, price moved to $688, a level also identified ahead of time, where bulls stepped in and pushed price back above $690. A second selloff followed and $688 gave way, opening the door toward $685, which again aligned with prior expectations. For several hours it looked like the lows might fail, but after four attempts to break the day’s low, price reversed and rallied almost straight into the close. Bulls continue to buy every dip and with SPY well above $685, they remain firmly in control, with $700 as the key upside target. Volume was well above average, which may concern bulls, but much of it came late in the session and could instead support further recovery. A push above $691 opens the door to $695 fairly easily. Overnight, bulls will look to defend the day’s low at $686. If that level fails, this fifth test would increase the risk that price drops to at least $683 and possibly lower, returning SPY to the $675–$685 range. Bears only gain real traction below $680. Thursday is likely to see higher prices but continued volatility due to geopolitical risks. Resistance sits at $690, $693, and $695. Support sits at $688, $685, $683, and $681. The $695 level is heavily defended and may cap upside, making failed breakouts there attractive. Two-way trading is possible, so fading extremes on both sides makes sense. A clean break below $686 favors shorts, while longs are preferred on dips toward $688 but likely not much lower. We continue to favor trading with the trend and buying dips while bulls remain in control, though bears are watching closely for additional tests of $686. Crypto was strong again today while all MAG stocks declined. Broad weakness in both would be required for a larger pullback. VIX rose 4.88% to 16.76, moving closer to neutral levels that no longer fully support risk-on conditions. SPY remains in the lower portion of a strong bull trend with structural support near $682.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the session in a narrow Bullish Trending Market State with SPY closing just above MSI resistance turned support. There were extended targets into the close on the upside and also to the downside in the premarket and morning sessions which led to the day’s declines. These stopped printing around noon setting up the rally that ensued with the MSI in a narrow bearish state. The MSI rescaled lower overnight and several times during the morning session but each was narrow and shallow indicating a market looking for a bottom. And it found the bottom just above $686 and bounced. The MSI moved into a wide ranging state which we do not favor trading before moving to its current bullish state in the last 30 minutes of the session. For Thursday the MSI is forecasting possible upside and a continuation of the recovery off the lows but with such a narrow range, it’s also very possible SPY revisits today’s lows once more. MSI support is $690.24 and lower at $689.22.
Key Levels and Market Movements:
Tuesday we stated, “Dips continue to act as short-squeeze opportunities.” We also said, “Tactical shorts are only favored above $696 on failed breakouts or on a clean break below $690,” and added, “Bulls will defend $690, a failure there likely sends SPY to $688, and a break of $688 opens a move back into the $675–$685 range.” With that context, the MSI opened in a bearish state and there was little evidence that $690 would hold on a fifth test. As we have discussed many times, repeated tests of a level drain liquidity and eventually cause that level to fail. With the herd participating in the premarket selloff, confirmed by extended targets printing, the fifth test did fail and SPY moved lower as the MSI rapidly and repeatedly rescaled down. This is the environment where traders want to get aggressive with the trend and let it run, trading cleanly from MSI resistance to MSI support. The statistical edge in this setup is roughly 70%. Today followed that script almost perfectly, with multiple opportunities to short MSI resistance, take profits at MSI support, and trail the position. These opportunities persisted until around noon, when extended targets stopped printing and the MSI stopped rescaling. After four to five tests of MSI support, dip buyers stepped back in and recovered more than half of the day’s decline. While the reversal was not a textbook failed breakdown, it was close enough to justify a long entry using MSI resistance as upside targets. Traders who followed these rules, respected the MSI signals, stayed patient, and remained disciplined were rewarded, as the session aligned cleanly with our broader framework for structure, trend, and execution. The MSI continues to prove its reliability as the cornerstone of our trading process.
Trading Strategy Based on MSI:
Thursday has Unemployment Claims, which are unlikely to move the market. After more than a week of strong gains, the market is taking a breather, but today’s decline has not changed the broader dynamic. Bulls remain firmly in control, and dips continue to act as short-squeeze opportunities. The near-term trend remains bullish. Tactical shorts are only favored above $695 on failed breakouts or on a clean break below $686. Long setups above $688 remain the best opportunities for Thursday. Macro risks persist, so traders should stay alert to headlines. The MSI is forecasting limited strength, and another test of today’s lows would not be surprising. Upside resistance sits near $695, and there is no meaningful bear case unless price falls below $680. Bulls are expected to defend $688 overnight, with a failure there likely sending SPY to $686. A break of $686 opens a move back into the $675–$685 range. If support holds, bulls will attempt to push toward $693 and then $695, with $700 as the larger objective. Gains above $695 may stall until $700 is cleared. The long-term bull trend remains intact above $640. 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 $695 to $718 and higher strike Calls while also buying $691 to $694 Calls indicating the Dealers’ desire to participate in any rally tomorrow. The ceiling for tomorrow appears to be $695. To the downside, Dealers are buying $690 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 $695 to $720 and higher strike Calls while also buying $691 to $694 Calls indicating the Dealers’ desire to participate in any rally this week. The ceiling for the week appears to be $699. To the downside, Dealers are buying $690 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 Thursday, respect the bullish structure but expect continued volatility. Favor longs on pullbacks toward $688–$685 and limit shorts to failed breakouts near $695–$700. Manage risk aggressively, stay flexible, and let price action at key levels guide decisions.

Good luck and good trading!