Market Insights: Tuesday, January 27th, 2026

Market Overview
US stocks mostly moved higher on Tuesday, with the S&P 500 pushing to another fresh all-time high as strength in technology offset mounting political and policy uncertainty ahead of a pivotal Federal Reserve decision and a wave of megacap earnings. The S&P 500 rose 0.4% to notch a record close just shy of the psychologically important 7,000 level, while the tech-heavy Nasdaq Composite led gains with a rise of nearly 1%, reflecting renewed optimism around the AI and semiconductor complex. In contrast, the Dow Jones Industrial Average fell roughly 0.8%, weighed down by a sharp selloff in UnitedHealth after the Trump administration’s proposed Medicare payment rates for next year failed to deliver the increase investors had expected. The divergence across indices highlighted a familiar theme: concentrated leadership in technology even as other sectors struggle to keep pace. Optimism in tech was fueled by upbeat developments from memory chipmakers, which helped lift sentiment ahead of earnings from several Magnificent Seven members. Meta, Microsoft, and Tesla are set to report results Wednesday, followed by Apple on Thursday, placing renewed focus on AI spending plans, cloud demand, and forward guidance. At the same time, investors remained acutely sensitive to political and trade headlines, still mindful of how quickly sentiment shifted during the recent Greenland tariff scare. Trade dynamics stayed in focus after the European Union announced it had reached what it called the “mother of all deals” with India, a move widely viewed as a strategic rebuff to President Trump’s aggressive tariff posture. Domestically, a sharp drop in US consumer confidence added another layer of caution, with the latest reading falling to its lowest level since 2014 as households grapple with the inflationary effects of an on-again, off-again tariff war and broader uncertainty around economic policy. The Federal Reserve began its two-day meeting on Tuesday, with markets widely expecting policymakers to hold interest rates steady on Wednesday, but attention is squarely on the tone of the statement and Chair Powell’s press conference for clues on the timing of future rate cuts. Political risk also remained elevated as a potential government shutdown loomed, with Senate Democrats attempting to block funding for the Department of Homeland Security following the fatal shooting by federal agents of Alex Pretti in Minneapolis. Taken together, Tuesday’s session reflected a market pressing to new highs on tech enthusiasm while remaining highly sensitive to policy, political, and macro crosscurrents.

SPY Performance
SPY continued its grind higher and printed a new intraday all-time high before consolidating into the close. The ETF opened at $694.22, rallied to a session high of $696.53, dipped to a low of $693.58, and finished the day at $695.64, up 0.41%. Trading volume totaled 48.96 million shares, well below average, signaling that much of the move occurred on lighter participation as traders positioned cautiously ahead of Wednesday’s FOMC decision. Price action was strongest in the morning session, with momentum fading into a choppy afternoon consolidation. Importantly, SPY remained firmly above the $685 level that defines bull control, keeping the broader uptrend intact despite the lack of follow-through late in the day.

Major Indices Performance
Index performance was notably mixed and reflected ongoing rotation. The Nasdaq surged 0.91%, driven by strength in large-cap technology and AI-linked names. The S&P 500 gained 0.41% and closed at a fresh record. In contrast, the Dow fell 0.83%, dragged lower by weakness in healthcare, while the Russell 2000 rose 0.26%, showing modest resilience but still lagging large-cap growth.

Notable Stock Movements
It was a mostly green day across the Magnificent Seven, led by Amazon, which gained as much as 2.63% and helped power the Nasdaq higher. The main laggards were Netflix and Tesla, with Tesla down as much as 0.99%. The broadly positive performance among megacaps reinforced that leadership remains intact, and sustained weakness across both megacap technology and crypto would be required to signal a more meaningful pullback.

Commodity and Cryptocurrency Updates
Commodities and crypto continued to confirm the risk-on undertone beneath the surface. Crude oil jumped 2.95% to $62.42, decisively pushing above the $60 level our model has been forecasting for several months. While volatility remains likely, sustained trade above $56 keeps the door open for a broader rally toward $70. Gold surged 1.88% to $5,216, extending its historic run as investors continued to hedge geopolitical, fiscal, and monetary risks even as equities climbed. Bitcoin rose 1.61% to close above $89,400, continuing to stabilize but still struggling to reclaim the $90,000 level.

Treasury Yield Information
The 10-year Treasury yield rose 0.45% to close near 4.233%. In our framework, yields above 4.5% begin to create headwinds for equities, while sustained trade above 4.8% often coincides with sharper market selloffs. A move above 5% historically signals significant equity risk, with a 20% or greater correction becoming likely near 5.2%. Tuesday’s uptick did little to disrupt equities but bears watching ahead of the Fed decision.

Previous Day’s Forecast Analysis
Monday’s framework emphasized that as long as SPY held above $685, bulls would remain in control despite choppy, rangebound conditions, with upside attempts likely to stall near the $695–$700 zone ahead of major catalysts.

Market Performance vs. Forecast
Tuesday’s session followed that script closely. SPY held well above $685, pushed into the $695–$696 area, printed a new intraday high, and then consolidated without breaking support. The lack of downside follow-through confirmed that bears remain sidelined.

Premarket Analysis Summary
In Tuesday’s premarket notes published at 7:32 AM, SPY was trading near $694.50 with upside targets at $696.25, $697.75, and $700, and downside levels at $693.25, $692, $691.25, and $687.75. The plan anticipated consolidation ahead of FOMC while acknowledging that a push toward $700 was possible with sufficient buying interest.

Validation of the Analysis
The intraday tape validated that outlook. SPY held the bias area, rallied into the $696 zone, and then chopped sideways into the close. Downside levels were never meaningfully threatened, while upside momentum stalled as expected ahead of Wednesday’s Fed decision.

Looking Ahead
Wednesday brings the Federal Funds Rate decision and FOMC statement, which are likely to drive significant volatility. Thursday follows with Unemployment Claims, and Friday delivers PPI. Earnings from several megacap technology companies remain a central focus throughout the week.

Market Sentiment and Key Levels
Sentiment remains bullish but cautious. SPY is firmly above $685, keeping bulls in control, though conviction is muted ahead of FOMC. Resistance sits at $697, $700, $702, and $705, while support rests at $695, $692, $689, and $685. The $697–$702 zone is heavily defended and likely to cap upside on initial tests.

Expected Price Action
SPY’s projected maximum range for Wednesday is $690 to $701, with the Call side dominating in a narrow but expanding band that signals choppy price action with intermittent trends. With FOMC and major earnings, volatility is expected to increase sharply.

Trading Strategy
Ahead of FOMC, patience and discipline are critical. Long setups remain favored above $685, particularly on pullbacks toward $692–$689 that show support. Shorts are favored on failed breakouts near $697–$702. Avoid chasing strength and be prepared for rapid directional shifts.

Model’s Projected Range
SPY’s projected maximum range for Wednesday is $690 to $701, with the Call side dominating in a narrow but expanding band that signals choppy price action with periods of intermittent trends. Wednesday has FOMC which is sure to move the market. Leading up to it the market is likely to consolidate while it awaits the Feds decisions and press conference. And there are several major companies announcing earnings this week, as well as the potential for unexpected geopolitical announcements so be prepared to trade what you see as new information is introduced to the market. Overnight SPY continued to build on its quest for new highs, gapping up so by the open, SPY was already above $694. The day ended with SPY closing up 0.40% at $695.79 but not before making a new intraday all-time high. This is well above the $685 level that defines bull control and as long as price remains above this level, $700 is a sure thing. Most of the day’s gains came in the morning session . By the afternoon SPY chopped around and ended up pulling back into the close. While SPY didn’t put in a new closing high, the new intraday high foretells what is likely to follow. Volume was lackluster and well below average, reflecting a market awaiting the Fed decision and perhaps news on a possible government shut down on Friday. The bulls remain in complete control, with the bears stay sidelined unless price closes below $680. Overnight, bulls want to hold above $695 or $690 lowest to maintain upside momentum. Bears are unlikely to engage unless $685 fails, and even then, $680 must break before bearish pressure increases. While its somewhat useless to forecast what may happen tomorrow with FOMC and corporate earnings looming, absent these events, if $695 holds overnight, bulls will likely attempt a push to $700 and beyond. But with all this news tomorrow, the market could move up $20 or down $20 or anything in between. Stick to the bull trend above $685 and you the probabilities favor your success. No matter what happens tomorrow, the long-term trend remains intact above $640, and with February historically prone to surprise selloffs, deeper weakness would not be shocking and should be viewed as a potential buying opportunity for a spring or summer rally. Absent a catalyst, for tomorrow resistance sits at $697, $700, $702, and $705, while support rests at $695, $692, $689, and $685. The $697 to $702 zone is heavily defended, making failed breakouts attractive for shorts, while longs remain favored above $685. Crypto rallied again today with most MAG stocks moving higher as well, with the exception of Tesla and Netflix. Sustained weakness across both leadership groups would be required for a larger pullback. VIX rose 1.24% to 16.35 and remains in risk-on territory. SPY is back inside a redrawn bull trend channel from the April lows, with structural support near $681.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the session in narrow, Bullish Trending Market State with SPY well above MSI resistance turned support. There were extended targets at the close and for most of the premarket and the day session. As such SPY had only one way to go and that was up and to the right. The herd was clearly participating in the push to new intraday highs. Later in the day profit taking and positioning for tomorrow’s FOMC had SPY pull back slightly from the highs to close near record territory. Overnight the MSI didn’t do much except rescale to a tighter bullish state. This very narrow state, but with extended targets, implied strength but more of a grind than straight up and that is exactly what SPY delivered. For tomorrow the MSI is forecasting more strength with a likely test of the day’s highs and perhaps new all-time highs on favorable Fed news. MSI support is $690.88 and lower at $689.86.
Key Levels and Market Movements:
Monday stated, “The bulls currently have the advantage,” and added, “A sustained hold above $690 sets the stage for a push toward $700,” while also noting, “The bias for Tuesday favors selling failed breakouts above $695 and as high as $697, while buying dips as low as $685.” With the MSI opening in a Bullish Trending Market State with extended targets printing overnight, leading up to the open, any dip was fair game to go long. And that opportunity arrived on a textbook failed breakdown at 9:40 am with the opportunity to go long at $694, targeting the premarket levels of $696.25 and $697.75. The first was hit before 11 am and then SPY chopped around and didn’t provide the opportunity to reach the second target. After several hours hovering at the day’s highs, it would have made sense to close out the trade at T1 and call it a day. We never fade extended targets so shorts were off the table the entire session, even if there was a brief dip midday. One trade a day is all that is needed to earn a living so again today, one and done is what traders should have expected today, thanks again to the premarket and post-market road maps and MSI signals. Remaining patient, and maintaining discipline, trading level to level will reward those traders who follow this mantra as the session aligned cleanly with our broader framework for structure, trend, and execution. The MSI once again proved its reliability as the cornerstone of our trading process.
Trading Strategy Based on MSI:
Wednesday has FOMC, and it is impossible to forecast direction on a day like this. Expect a potential move up $10 to $20, down $10 to $20, or no move at all. There is no way to know in advance. Inexperienced traders are often better off sitting out, as FOMC days are typically violent, trap-filled, and unforgiving. That said, the primary trend remains bullish as long as SPY holds above $685. Bulls have complete control above this level. A sustained hold above $695 opens the door for a push toward $700 and higher. The bias for Wednesday favors selling failed breakouts above $697 and buying dips down to $685. Expect heavy chop late in the morning, which makes fading extremes reasonable until the announcement. After FOMC, trade only what you see and follow the MSI closely. For bears to regain any real traction, SPY must break below $680 and stay there. The long-term bull trend remains intact above $640. 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

Dealers are selling SPY $698 to $715 and higher strike Calls while buying $696 to $697 Calls indicating the Dealers’ desire to participate in any continuation of the rally on Wednesday. The ceiling for tomorrow appears to be $700. To the downside, Dealers are buying $695 to $635 and lower strike Puts in a 2:1 ratio to the Calls they’re selling/buying displaying little concern that prices could move lower. Dealer positioning is unchanged from neutral/slightly bullish to neutral/slightly bullish.
Looking Ahead to Friday:
Dealers are selling SPY $696 to $720 and higher strike Calls indicating the Dealers’ belief that prices may not move much this week. The ceiling for the week appears to be $700 but there is also the potential to reach $705. To the downside, Dealers are buying $695 to $585 and lower strike Puts in a 4:1 ratio to the Calls they’re selling, reflecting a market that is a somewhat concerned about lower prices but not overly so. For the week Dealer positioning is unchanged from slightly bearish to 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 Wednesday, respect the bullish structure while preparing for heightened volatility. Favor buying pullbacks that hold above $685 and selling failed breakouts near $697–$702. Manage risk tightly, stay flexible, and let price action after the Fed decision dictate positioning rather than anticipation.

Good luck and good trading!