Staying Objective - Market Analysis for Jan 8th, 2026

I warned yesterday that, even though the market has extended beyond reason and well beyond any norms, we still must stay objective and not assume we will immediately head into a bearish environment until support breaks.  So, along those lines, I am trying to identify a long set up while we are still over support.

I am including an ES chart in this update because you cannot see this potential set up in the SPX.  As you can see from the attached 15 minute chart, there is potential for a leading diagonal for wave (i) of iii pointing us ultimately towards the 7150-7175SPX region if it triggers.  But, we do not even have the set up in place yet.

If you look at the chart, you will see we still need a 5^th wave higher high to even consider a leading diagonal.  And, that should happen before we break below the wave 2.  

Until that set up develops, the SPX looks like a b-wave corrective rally, which would suggest a c-wave lower is yet to be seen.  Moreover, if that decline holds over 6824SPX, and then begins a 5-wave rally, then we can resurrect a potential i-ii, (i)(ii) pointing north of 7100SPX.  

So, for now, as we still remain over the 6824SPX support, I am giving the market room to provide to us an upside set up.  However, should the market break that support, then we begin to open the door to a more bearish interpretation, which is confirmed on a break down below 6720SPX.

But, I want to reiterate again that this market can continue to extend, as Keynes so wisely noted, markets can remain irrational longer than you can remain solvent.  Of course, once it breaks support a market this stretched to the upside will likely decline quite rapidly.  But, until we break at least initial support, we need to respect that the bulls still remain in control for now.