So far, the holiday period has delivered exactly what we’d expect: a slow grind higher. The mid-December “rug pull” played out cleanly, ending with a spike down that failed during the following Asia session. CPI then provided the fuel to carry us into the end of that week, finishing Friday, December 19th, with a classic P-profile.
If they hold it up there with RTH then it could be a squeeze from the P profile. But long time until open.
Notably, there was no test of that Friday high. Sunday opened with a gap-and-go, offering very little pullback. As outlined in last week’s plan, my focus was strictly on buying dips, with the understanding that opportunities may only present once per day in this type of environment. That proved true again—similar to what we saw around Thanksgiving. You get one clean, low-risk entry, and then the market simply floats higher.
Will probably not do much this week other than find dips to buy. This week may play out like Thanksgiving – a slow grind. Maybe Santa rally started, but maybe it’s a quick trap as it’s usually closer to the end of December an a few days after the 1st. We shall see…
Sellers effectively took the week off. The result was low volume, low participation, and poor structure, allowing price to drift higher with little resistance. ES (non-back adjusted) printed a new all-time high on Tuesday, followed by SPX and SPY making new highs on Wednesday. Notably, NQ and QQQ remain below their respective all-time highs, which tempers confidence in a sustained equity breakout for now.
I would feel far more constructive on the broader equity complex once SPX decisively clears 6980 (SPY ~695) and QQQ makes a clean all-time high with continuation. It is also worth noting that RSP, IWM, QQQ, and QQQE are all still trading below their all-time highs while SPX is not. Combined with the fact that we are trading shortened holiday weeks, this argues for patience. I would rather see how the first full trading week of 2026 behaves before drawing firm conclusions about the durability of this breakout. I will be careful assuming failure if next week is red, and equally careful assuming success if next week is green.
For now, bulls remain in control and deserve the benefit of the doubt. However, the poor structure beneath current price, created by the absence of sellers, introduces risk. Markets built this way are often vulnerable to structure repair and, at times, quick liquidation moves. Bears did manage to produce a solid excess Friday morning, though they left behind an untested overnight high just above. Both of these areas are likely to act as magnets at some point, once consolidation or repair begins. The LBAF on Friday’s initial balance low lacked follow-through and could not even tag Friday’s open, reinforcing how thin participation has been.
Looking ahead, the first area that matters is Friday’s low. That level aligns near last week’s value area high, the prior SPX all-time high, and last week’s LVN. Losing it would be the first real indication of risk and would place the daily timeframe back into balance. Until that happens, any weakness should still be viewed as corrective rather than a structural failure.
A true failed multi-week balance breakout does not come into play until much lower, around the 6890s, which marks Sunday’s gap-and-go area. Until price reaches that zone, downside movement should be treated as part of a broader consolidation rather than the beginning of a larger trend change.
Just below current price, the 6952–6955 area stands out as it marks the Tuesday–Wednesday overnight lows, with Wednesday’s RTH low just above. Taking out Wednesday’s low would place us into a 3-day balance. If that occurs, a look below and fail (LBAF) of this zone followed by a reclaim of 6967–6969 would be constructive, though ideally price would also need to push back above Friday’s value to remove the pause that formed into the end of last week.
If weakness extends further, Tuesday’s low becomes the next area of interest. Tuesday has very thin structure, and the 6932–6936 zone just above Tuesday’s low has shown consistent bidding. An initial test there should attract responsive buyers, and the first attempt would reasonably be expected to produce at least a modest bounce, assuming price does not arrive there in a disorderly liquidation.
Acceptance below 6922–6924 brings last week’s RTH low into play at 6908.5–6911. Taking out 6908.5 would confirm that the weekly timeframe has transitioned into a larger balance and would, in my view, officially mark this as a three-month balance. Below that sits an unfilled RTH weekly gap from 6893.75–6908.5, which provides another layer of structural support for buyers should a failed breakout begin to develop.
Overall, the market remains in an uptrend, but it is resting on weak structure built during low-participation holiday trade. That leaves us vulnerable to quick repair moves and sharp liquidations. Until key levels break with acceptance and continuation, dips should be treated as part of a broader consolidation rather than evidence of a trend reversal. As we move into the first full week of the new year, the market should begin to show its hand more clearly. Until then, patience, location, and discipline remain paramount — one level at a time.
ES Live Chart: https://www.tradingview.com/chart/f8EEzTyy/
Expected Move: WK – 64pts, Monday – 27pts
