To The Moon

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$  $NASDAQ 100(NDX)$  

🎯 Executive Summary

I’m extremely confident this is one of the most structurally important $SPX setups traders will face in early 2026. $SPX has just completed three straight double-digit years, +24% → +23% → +16%. Since 1950, that has occurred only eight times. I’m not reading that as “trend broken.” I’m reading it as “regime sensitivity rising,” where forward returns compress and volatility becomes the tax.

I’m also focused on the second layer most traders underweight. 2026 is Year 2 of the presidential cycle, historically the weakest year, lowest average return around 4.62%, only 53% positive, and the highest volatility profile. The real danger zone is the first half of Year 2. January to June averages –2.05%, barely half finish positive, and chop plus drawdowns are normal.

When I combine three consecutive 10%+ years with entry into Year 2, I get a seasonal and structural headwind exactly when complacency tends to float highest.

💰 Financial And Historical Performance Breakdown

I’m treating the post-streak data as a warning label, not a prophecy. After three straight 10%+ years, January averages –1.05%, median –0.72%, and only 43% of Januarys are positive. The next full year averages +3.03%, and only 43% of those years finish green. That is materially below “all years since 1950,” where January averages +1.07%, the first half averages +4.17%, and the next year averages +9.58%, with 61%, 69%, and 73% positive rates respectively.

Presidential cycle stats since 1949 reinforce the same asymmetry. Year 2 is the weakest, average return 4.62%, median 1.06%, only 53% positive, and the highest standard deviation at 20.2%. The first half of Year 2 is worse, average –2.05%, median 0.45%, only 53% positive, and standard deviation 13.2%. I don’t need a narrative to respect that, I need discipline.

🛠️ Strategic Headwinds And Execution Risk

I’m not here to fearmonger. There are bullish precedents, and they matter. After similar streaks, 1997 follow-through was massive, and 1998 delivered +26.67%. The separator was January.

Jan 1998: +1.02%, then the year ripped higher.

Jan 2022: –5.26%, then the year turned brutal.

That’s why the January Barometer matters again. After extreme winning streaks, January often decides whether bulls earn a fourth year, or give gains back first.

🧠 Analyst, Flow, And Institutional Sentiment

I’m taking Citadel’s Rubner framing seriously because it matches what I see in flows. “Markets enter the year with momentum, but January brings a distinct set of dynamics. Capital is being deployed, positioning is rebuilding, and volatility is compressed even as the January catalyst calendar ramps up.”

January is historically the strongest month for equity capital deployment. Money market cash levels sit at a record $7.6 Trillion. As markets reopen after the holiday pause, capital tied to retirement contributions (401k, 529), year-end bonuses, and discretionary PWM mandates moves quickly from cash into passive risk assets. This is particularly true when money market yield levels have declined.

Rubner also notes $NDX seasonality is even stronger than $SPX. Since 1985, $NDX has risen in 70% of Januarys, with an average return of 2.5% and average gains of roughly 5.8% when January is positive. The daily seasonality path matters too. Early January tends to be weak (we saw that), then there’s a spurt for a few days (what we may be seeing now), then no net progress until late month when it squeezes higher again. I’m watching whether price continues to respect that rhythm.

📉📈 Technical Setup, Breadth, And Derivatives Structure

I’m tracking breadth and hedging pressure as the real tell. $SPX buy signals are turning up again via MACD Breadth, a constructive shift in participation after early-month weakness.

I’m also watching the pin. $SPX is pinned by a strong positive GEX cluster, upside pressure building. Positive gamma often dampens directional moves and encourages pinning until a break forces dealer hedging to flip from dampener to accelerator.

$SPX Key Levels for 07Jan2026

Gamma Levels in Focus:

Put Support: 6700

High Volume Levels (0DTE): 6895, 6900

Major Gamma Exposure: 6850, 6875, 6890.95 (1D Min), 6925, 6940 (Call Resistance & Gamma Wall), 6950, 6975, 6980, 6985, 6998.09 (1D Max), 7000 (Call Resistance), 7020, 7025, 7050

1-Day Expected Move:

Min: 6890.95

Max: 6998.09

0DTE Put Support: 6895

Swing Levels:

Lower Bands (Bullish Bias): 6780.48, 6781.43, 6825.04

Upper Bands (Bearish Bias): 6966.46, 6978.52

Risk Triggers: 6724.54, 6738.42, 7012.0, 7022.67, 7064.6

What does it mean?

Gamma levels highlight where hedging flows may create support and resistance. Swing levels offer directional bias, lower bands = bullish, upper bands = bearish. Risk triggers are inflection points for potential acceleration or reversal.

On $SPY, the vol surface is calming down. The ATM term structure is lower across maturities, traders are pricing less near-term volatility. The smile has eased too, puts still cost a bit more, but overall protection demand is lighter. A market leaning toward stability. $SPY puts just crossed call again.

Nearly 8B in positive gamma exposure is stacked between $693–$694 on $SPY. With price flirting near ATHs, this kind of exposure typically dampens directional moves and encourages pinning. I don’t love pressing trades at all-time highs, and I’m still waiting to see if we get a clean rejection here. Might get it, might not. Patience matters at these levels.

🌍 Macro, Political, And Volatility Overlay

I’m flagging a major volatility catalyst ahead. Friday could be a major volatility event for global markets as the U.S. Supreme Court rules on President Trump’s tariffs. Polymarket currently shows just a 22% probability of the Supreme Court ruling in favour of the tariffs, setting the stage for a surprise outcome risk. This matters because low-probability events can hit hardest when positioning is rebuilt and volatility is compressed.

I’m also watching the froth indicator properly. Goldman Sachs’ Speculative Trading Indicator spiked in 2025 but stays well below the 2000 dot-com and 2021 meme or SPAC mania extremes. Extended valuations, sure. But this mutes “AI bubble” hysteria because it’s more earnings and AI capex-driven than pure froth. I stay cautiously bullish, not complacent.

🔥 Volatility Signal I Can’t Ignore

Since Dec 22, $64M+ in single-leg, OTM calls (A, AA) have been bought on $VIX vs just $144K in puts. Traders are loading up on cheap volatility.

⚖️ Verdict & Trade Plan

I am not bearish the cycle, but I am tactically strict on timing. I’m treating this as Hold with tactical bias. I’m respecting 6895–6900 as the near-term support shelf, and I’m watching 6940–7000 as the decision zone.

If $SPX accepts above 7000 with breadth expansion and the gamma wall stops pinning and starts feeding momentum, I look toward 7025 and 7050 as the next upside checkpoints, with risk triggers at 7012.0 and 7022.67 as acceleration markers.

If $SPX rejects 6940 and fades back through the high-volume 0DTE zone, I’m watching 6925, 6895, then 6875 and 6850, with the lower swing bands at 6825.04 and 6780.48 as deeper structure tests. Confirmation is breadth, vol behaviour, and how price reacts at the gamma bands, not vibes.

🏁 Conclusion

I’m convinced January is the market’s credibility reset after an extreme three-year win streak, especially inside presidential Year 2 where chop is the historical baseline. If $SPX thrives through January, the path for bulls gets much friendlier. If it fails, giving back gains first becomes normal, not bearish. The market may not see it yet, but I do. Structure beats noise.

📌 Key Takeaways

• $SPX: +24% → +23% → +16%, only eight occurrences since 1950.

• Post-streak January: avg –1.05%, median –0.72%, only 43% positive.

• Presidential Cycle Year 2: avg 4.62%, only 53% positive, highest volatility at 20.2% std dev.

• 1-Day expected move: 6890.95 to 6998.09, 0DTE put support 6895, call resistance and gamma wall 6940, major call resistance 7000.

• $SPY: nearly 8B positive gamma stacked at $693–$694, pinning risk near ATHs, plus $SPY puts just crossed call again.

• $VIX: $64M+ OTM calls vs $144K puts since Dec 22, volatility insurance demand is building.

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Trade like a boss! Happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀

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