Forecasting price movements is tricky – there’s always a 50/50 chance of being wrong! SPX is retesting the daily head and shoulders (H&S) pattern, and a break below the right shoulder could confirm a move to the bearish targets of 5700 and 5610.

With $ADD at a bullish extreme, the case for a bearish continuation is strong. The evolving price action highlights how yesterday’s patterns can shift into something new today.

It’s a waiting game to see if the bears take control.

SPX rallied to retest the consolidation base, leaving us at a critical juncture.

Two scenarios are in play: continuation of the bearish breakout with targets at 5700 and 5610, or a range reversal climbing back to range highs.

The 5850 level is key to determining which way the market hops next.

The Santa Rally failed to show, and January’s bullish hopes are stalling as SPX breaks lower.

Patterns on the 30-minute chart evolved into bearish formations, with the daily head-and-shoulders confirming a breakout.
With overnight futures already down 50 points, the bearish breakout targets are 5700 and 5610.
A trending move south could provide opportunities to compound profits while offsetting prior bullish trades that missed their targets.

In 1720, the South Sea Bubble became one of history’s most infamous speculative disasters.

Founded to manage Britain’s national debt and exploit South American trade, the South Sea Company whipped up a frenzy, promising immense riches.
Shares skyrocketed 700%, only to crash 85% by October.

The company’s valuation briefly surpassed Britain’s economy, leaving thousands bankrupt when the bubble burst.

Corruption, greed, and easy credit fueled the mania. In the aftermath, reforms were introduced, but the South Sea Bubble remains a stark warning about the dangers of unchecked speculation.

The U.S. added a whopping 256,000 jobs in December, smashing expectations and dropping the unemployment rate to 4.1%.

This strong jobs report rocked markets, sending Treasury yields higher, with the 30-year yield topping 5% for the first time in over a year.
The Fed’s rate cut narrative is fading fast, with some analysts now debating potential hikes instead of cuts.
Stocks, however, retreated as markets grappled with the implications of a resilient economy and stubborn inflation. The 2s10s yield curve reached its steepest point since 2022, while gold surged over 1%.

Here’s what this means for traders.

The Buffett Indicator, which compares the total market cap to GDP, sits at 202.2% – well above the 100% overvaluation threshold.

With the Total Market Index at $59.4 trillion, it signals a potentially overpriced stock market.
While this ratio offers a macroeconomic lens into market valuation and trends, limitations like rising corporate profits and globalization can skew its implications.

It’s a useful tool but not a standalone market compass.