“I am stranded
Caught in the crossfire” Crossfire, Stevie Ray Vaughan
Yesterday morning we tweeted:
These stocks were strong out of the gate and got stronger especially after STX reported.
STX was subdued after reported but then exploded, igniting the big cap growth names above.
STX closed at 371.76. After fully digesting earnings it exploded to 408.
Wowzers. From the last swing low of 278 on January 12 a full 360 degree advance gives 349.
Today is direct 345 and square 327
This is in direct contrast to the DJIA which closed down 408 points.
The SPX broke out of a small Tops Line from January 12, but the 3 Day Spike Rule is on the table for tomorrow.
Despite Tuesday’s breakout a fresh new high, the big picture shows a large potential Ending Diagonal at the top of a 49 (7 squared) trend channel.
Remember 7 squared DAYS ties to the Gann Panic Cycle.
It would not be surprising to see a short-lived breakout above the top rail of this channel followed by a quick reversal.
We have all the ingredients: the Fed, the kick off of earnings season, market cycles and natural cycles and another possible government shutdown.
Not to mention disintermediation as to the Yen Carry Trade.
Interest rates are rising in Japan for the first time in a generation; yet the yen is weakening.
The U.S. is said to be intervening or contemplating doing so by selling dollars.
It’s a recipe for intense volatility and UVXY recognizes it…up 93 cents today in a sharply green tape.
Following the October 29 all-time high the SPX broke below its 50 day line three times on a closing basis:
November 17
December 17
January 20
In each instance the 50 day moving average was quickly recaptured…especially the last two times when the index closed below the 50 dma for only one day before turning back up above ‘the line’.
As well, the last two instances led to new all-time highs albeit the new highs following the December 17 ‘undercut’ were marginal and brief.
To wit, the new all-time highs struck on January 9th and 12th were followed by a large Breakaway Gap back below the 50 dma.
It looked like the downside deal had been sealed.
However the next day saw a large Stick Save with the SPX offsetting the Breakaway Gap on Monday.
Yesterday we got continuation and a record closing high.
Maybe something, maybe nothing but once again the SPY scored another “Nicolai Tesla” with a high of 696.
The script is playing out according to our outlook on Monday where we noted The Roadmap indicated a sharp rally into the close.
We added. “Option premiums will be extremely expensive due to elevated implied volatility, so the ideal play may be to wait until Wednesday for a bearish bet to avoid premium decay.
And that’s exactly what we’re going to do.
The game plan is to buy puts prior to the close.
The Roadmap suggests Thursday will see bearish momentum.
Today is FMOC Cha Cha Day. And, it’s coming at a record high on the heels of elevated volatility within the context of a 3 month Fargo (chop fiesta).
As well, we get earnings after the bell on MSFT, META, TSLA and LRCX.
Before the bell we get APH.
It looks like a doozy on deck.
In sum, the critical message from Tuesday’s action is not the record high itself, but what failed to confirm it.
As the SPX closed at a new peak, the Mag Seven ETF (MAGS) did not confirm with a new high.
More importantly—and with far greater historical weight—the NYSE advance/decline line also failed to confirm.
That failure is not a minor divergence. Over the last 100 years, every final bull market high in the SPX has occurred when the advance/decline line diverged and failed to confirm price.
Yesterday, that condition appeared precisely as SPX recorded a record close.
This moment also fits cleanly into the recent FOMC pattern. The October 29, 2025 FOMC day marked the prior SPX peak—exceeded today by only a fraction of a point before the sharp October/November selloff.
The next peak occurred on December 26, 2025 also an FOMC day, after which markets again declined decisively.
Today is another FOMC day.
Markets appear positioned to attempt yet another peak—but this time with the advance/decline line already failing to confirm, raising the risk that today marks a potential important top, rather than just another interim top.
Roadmap for Wednesday
Rally into 10:15
Flat into 11:00
Rally into 11:45
Small pullback into12:00
Rally into close
However there are two possible Inversion Pivots
The first is at 10:15
The second looks key at it is at 11:45 which ties to FOMC