January 9, 2026

The New Year got off to a slow start, but kicked into gear this week with the DJIA, S&P 500, NYSE, DJ Transportation Index, Philadelphia Semiconductor Index and Russell 2000 all posting new record highs during the period. The weekend capture of Venezuelan leader Maduro triggered a stock market rally on Monday led by oil-related stocks but also strength in semiconductors with the Philadelphia Semiconductor Index (SOX) surging +4%. While shares of Chevron (CVX) and Exxon Mobil (XOM) traded sharply higher, oil refinery stocks did better with Valero Energy (VLO), Haliburton (HAL) and SLB (SLB) gaining +10%. The DJIA and S&P 500 were sitting at new record highs at Tuesday's close in a broad-based rally led once again by semiconductors, while metals and healthcare stocks also outperformed. The Money Center Banks were also hitting all-time highs including Goldman Sachs (GS), Morgan Stanley (MS) and Bank of America (BAC). Mixed jobs data midweek put a clamp on the record run, with announcements from the White House on defense and the housing market also curbing buyers. Industrials helped boost the different indexes on Thursday after the White House said it wanted to increase military spending by 50% sending Lockheed Martin (LMT), Northrup Grumman (NOC), L3 Harris (LHX) and others higher with the US Aerospace & Defense ETF (ITA) posting new record highs. Friday's BLS jobs report came in slightly lower than expectations leaving yields mixed on the week but dropping the CME Group FedWatch to only a 5% probability of the Federal Reserve trimming rates at the January FOMC Meeting. Every sector except Utilities (XLU) participated in this week's rally with Consumer Discretionary (XLY), Materials (XLB), Industrial (XLI), Energy (XLE) and Consumer Staples (XLP) at the top of the leaderboard. This week investors got good news on a growing economy, increased M&A activity and a jobs market that remains resilient and the major averages powered higher on bullish underlying breadth. Next week Q4 earnings begin to roll out with the Money Center Banks beginning on Tuesday and investors will be looking at forward guidance to determine how much further the new year rally can roll. 

For the period, the DJIA gained 1121.68 points (+2.3%) and settled at 49504.07. The S&P 500 tacked on 107.81 points (+1.6%) and closed at 6966.28. The NASDAQ added 435.72 points (+1.9%) finishing at 23,671.35, while the small cap Russell 2000 jumped 116.00 points (+4.6%) and settled at 2624.22.

Market Outlook: The technical condition of the market improved this week with most of the different index striking new all-time highs. Six of the 11 sectors are also at new highs supporting a broadening out of the rally. Surprisingly, the Technology (XLK) sector is lagging the S&P 500 with a 50-day RS of 0.96 as it last made a new high in October. The technical indicators are in or moving into bullish ground and despite this week's gains, stochastics are just stepping into an overbought condition with more upside room before becoming a concern. The secondary indexes which include the DJ Transportation Index, Russell 2000 and Philadelphia Semiconductor Index all outperformed the major averages which bodes well for the market going forward. Market technicians like to see the secondary indexes lead the market higher/lower pointing to more aggressive buying. The VIX, or, Volatility Index, which measures how concerned traders are of possible weakness in the market, remains at a low level of 14.49 reflecting that market participants aren't expecting a selloff in the near-term and has yet to reach a reading of complacency whereas it slips below 12. That should keep investors buying the dips as we move further into January.

A chart of these indicators can be found by going to the Market Edge Home page and clicking on Market Recap, which is on the right-hand side of the page just below the Second Opinion Status numbers.

Cyclical Trend Index (CTI): The underlying premise of the CTI is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves. There are five identifiable cycles, each with different time durations at work in the market at all times.

Currently, the CTI is Positive at +6, down a notch from the previous week. Cycles A B, C and D are bullish, while Cycle E is bearish. The CTI is projected to remain in a positive configuration through January.

Momentum Index (MI): The markets momentum is measured by comparing the strength or weakness of several broad market indexes to the DJIA. Readings of -4 and lower are regarded as bearish since it is an indication that a majority of the broader based market indexes are weaker than the DJIA on a percentage basis. Conversely, readings of +4 or higher are regarded as bullish.

The Momentum Index is Neutral at +0, down two notches from the previous week. Breadth was positive at the NYSE as the Advance/Decline line gained 2907 units while the number of new 52-week highs exceeded the number of new lows on all five sessions. Breadth was also positive at the NASDAQ as the A/D line added 3641 units while the number of new highs out did the new lows on each day. Finally, the percentage of stocks above their 50-day moving average jumped to 68.0% vs. 49.5% the previous week, while those above their 200-day moving average increased to 66.6% vs. 63.3% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

As mentioned, underlying market breadth was strong during the period with the NYSE Advance/Decline Line, a leading indicator of market direction, posting several new highs. New 52-week highs in the NYSE and NASDAQ expanded during the period with the NASDAQ recording 379 new highs on Tuesday, the most since late October. The NYSE recorded more new highs than lows for an eighth consecutive week.

Sentiment Index (SI): Measuring the market's Bullish or Bearish sentiment is important when attempting to determine the market's future direction. Market Edge tracks thirteen technical indicators listed below that measure excessive bullish or bearish sentiment conditions prevalent in the market. The Sentiment Index is Negative at -6 up a notch from the previous week.

Investor sentiment remains overly bullish and with the major averages posting new highs we're seeing FOMO (Fear Of Missing Out) investors moving into the market. The American Association of Individual Investors (AAII) showed retail bulls rose to 42.5%, above the historical average of 37.5%, while The National Association of Active Investment Managers (NAAIM) Exposure Index shows the professionals 'all in' at 97.7%.

Market Posture: Based on the status of the Market Edge, market timing models, the 'Market Posture' is Bullish as of the week ending 11/28/2025 (DJIA - 47716.42). For a closer look at the technical indicators and studies that make up the market timing models, check out the tables located below.

Industry Group Rankings: What's Hot (16) - What's Not (14): The following are the strongest and weakest Industry Groups for the period ending 1/08/26. Strongest: Metals & Mining, Transportation, Banking and Healthcare Products. Weakest: Technology Services, Conglomerates, Food, Beverage & Tobacco and Infrastructure. To review all the Industry Group rankings in the Market Edge universe, click on the Industry Group tab.

ETF Center: The top performing ETF categories for the week ending 1/08/26 were: Specialty Natural Resources (+6.57%), Blend-Small Cap (+6.39%), Sector-Alternative Energy (+6.07%), Sector-Basic Materials (+5.72%) and Commodity-Precious Metals (+4.88%). The weakest categories were: Shorts (-4.05%), Bond-International (-0.36%) and Sector-Telecom (-0.10%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT