Our View

There has been a lot of talk about Tech / AI losing some of its glimmer. I’m not sure about that, but what I am sure about is that there have been a lot of big rotations — especially last week. The Dow and S&P made new all-contract highs, while the Nasdaq is 1.4% off its 52-week high, and the Russell 2000 closed up 0.8% and up 4.6% on the week.

I saw a lot of rotations at my S&P desk for above futures repositioning for pension hedge funds, but it was much more defined for the portfolio managers, AIG, and Bank of America business. But it’s a whole different story today, as there is some type of rotation literally going on every day. It’s also something I believe can — and should — be tracked.

Our View

Anyone who has been reading the Opening Print knows I have an old saying: we live in an ever-changing world where nothing stays the same, and that the old trading tools we used to use to make money don’t work anymore — or at least not until they’re coded into the bots.

I’ve also said the U.S. can no longer be the global sheriff. But like it or not, President Trump’s attack on Venezuela — threatening to take over its oil industry, blockade it, place new tariffs on Russia, and impound oil tankers — is jeopardizing the flow of discounted Venezuelan oil to its refineries. This will likely impact the role of Chinese oil companies in Venezuela’s upstream business, and has caused a jump in geopolitical risk for future investment in Latin America.

At the same time, pushing for protests and regime change in Iran has caused the largest protest movement there. While I didn’t like the Israel/Gaza carnage, Operation Midnight Hammers sent a message to the world that the current administration, unlike many other administrations, is not afraid to upset the global status quo. Each of the countries listed above has been sending arms and terrorists right into our backyard.

As I said, I don’t like war. But how long could the U.S. allow Latin America to let these countries sit in our backyard and undermine our administrations and increase security risks? I have always said: I’m not a Wall Street analyst, and I don’t know what the S&P is going to do next, but I started saying there would be jumps in volatility risk from the day Trump took office to the end of his tenure, and I still feel strongly about that. I also said the Putin “special operation” would not lead to a negotiated end to the war.

Will Venezuela heed Trump’s demands? Is there going to be a regime change in Iran? Will Russia and China just let all this happen without a fight or repercussions? Will the U.S. strike Iran over Trump’s threat not to kill protesters? That is the trillion-dollar question — and I do not have an answer for that.

History has a way of repeating itself. Oil was a primary driver for Japan’s expansion and entry into World War II, as Japan lacked domestic resources and faced a crippling U.S. oil embargo, forcing them to seek resource-rich territories in Southeast Asia. This led to attacks like Pearl Harbor to secure oil and other vital supplies. Japan’s aggression in China and French Indochina prompted the U.S. to freeze assets and cut off oil exports, threatening to halt Japan’s war machine — making oil the central strategic goal for conquest, particularly the Dutch East Indies.

The Broader 2026 Outlook

The broader 2026 outlook from Wall Street consensus is positive, with targets like 7600 from Goldman Sachs (which is 12% higher), or 7700 from Yardeni. The key drivers include AI/capex growth, potential policy tailwinds, and solid earnings expectations.

The most optimistic calls come from:

If you look back at the end of 2024, none of these banks said the S&P would go up as much as it did in 2025, and some actually lowered their targets after the April 2025 selloff.

Everyone should know this: the reason the big banks always have high S&P and earnings projections is because they are brokers, and they never want to post negative research. It’s been that way since the 1929 stock market crash, and just like it was in the 2007–2008 credit crisis.

S&P 500 Earnings Season Preview: Q4 2025

By John Butters  |  January 9, 2026

Heading into the start of the earnings season, both analysts and companies have been more optimistic than normal in their earnings outlooks for the fourth quarter. However, it should be noted that most of this optimism is concentrated in one sector: Information Technology. As a result, estimated earnings for the S&P 500 for the fourth quarter are higher today compared to expectations at the start of the quarter. The index is also expected to report (year-over-year) earnings growth for the 10th straight quarter.

In terms of estimate revisions for companies in the S&P 500, analysts have increased earnings estimates for Q4 2025. On a per-share basis, estimated earnings for the fourth quarter increased by 0.5% from September 30 to December 31. In a typical quarter, analysts usually lower earnings estimates during the quarter. Over the past five years (20 quarters), earnings expectations have fallen by 1.6% on average during a quarter. Over the past ten years, (40 quarters), earnings expectations have fallen by 3.1% on average during a quarter. At the sector level, the Information Technology sector recorded the largest increase in estimated earnings of all eleven sectors during the quarter.

In terms of guidance, both the number and percentage of S&P 500 companies issuing positive EPS guidance for Q4 2025 are higher than average. At this point in time, 107 companies in the index have issued EPS guidance for Q4 2025. Of these companies, 57 have issued negative EPS guidance and 50 have issued positive EPS guidance. The number of companies issuing positive EPS guidance is above the 5-year average (44) and above the 10-year average (39). The percentage of S&P 500 companies issuing positive EPS guidance for Q4 2025 is 47% (50 out of 107), which is above the 5-year average of 42% and above the 10-year average of 40%. At the sector level, the Information Technology sector has the highest number of companies issuing positive EPS guidance for Q4 2025 of all eleven sectors.

Due to the upward revisions to earnings estimates by analysts and more positive EPS guidance issued by companies, the estimated (year-over-year) earnings growth rate for Q4 2025 is higher today relative to the start of the fourth quarter. As of today, the S&P 500 is expected to report (year-over-year) earnings growth of 8.3%, compared to the estimated (year-over-year) earnings growth rate of 7.2% on September 30.

If 8.3% is the actual growth rate for the quarter, it will mark the tenth consecutive quarter of year-over-year earnings growth for the index.

Eight of the eleven sectors are projected to report year-over-year growth, led by the Information Technology sector. On the other hand, three sectors are predicted to report a year-over-year decline in earnings, led by the Consumer Discretionary sector.

In terms of revenues, analysts also raised their estimates during the quarter. As of today, the S&P 500 is expected to report (year-over-year) revenue growth of 7.7%, compared to the expectations for revenue growth of 6.5% on September 30.

If 7.7% is the actual revenue growth rate for the quarter, it will mark the second-highest revenue growth rate reported by the index since Q3 2022 (11.0%), trailing on the previous quarter (8.4%). It will also mark the 21st consecutive quarter of revenue growth for the index.

Ten sectors are projected to report year-over-year growth in revenues, led by the Information Technology, Communication Services, and Health Care sectors. On the other hand, the Energy sector is the only sector predicted to report a year-over-year decline in revenues.

For Q1 2026 and Q2 2026, analysts are calling for earnings growth rates of 12.6% and 14.6%, respectively. For CY 2026 analysts are projecting (year-over-year) earnings growth of 14.9%.

The forward 12-month P/E ratio is 22.2, which is above the 5-year average (20.0) and above the 10-year average (18.7). This P/E ratio is also above the forward P/E ratio of 22.0 recorded at the end of the fourth quarter (December 31).

During the upcoming week, 14 S&P 500 companies (including 2 Dow 30 components) are scheduled to report results for the fourth quarter.

I still think the ES is going higher, but there are a few things I’m concerned about.

The first is that everyone is getting too bullish. The second is that while I understand new contract highs are considered bullish, I also don’t think the ES just goes straight up.

Our lean: If the ES gaps up, it could be for sale on the open, or it could be one of those sell-the-rallies, buy-the-pullbacks type of days. Or maybe just buy the pullbacks.

Market Recap

After a late-day rally, the ES traded up to 6989.75 on Friday’s Globex after the nonfarm payrolls rose a seasonally adjusted 50,000 in December, lower than the downwardly revised 56,000 in November and short of the Dow Jones estimate of 73,000. The ES opened the regular session at 6970.25, up 9.5 points or +0.14%.

After the open, the ES traded 6968.50, rallied up to 6987.50 at 9:35, and sold off down to 6955.50. It then traded up to 7014.00 at 1:40, pulled back to 7008.25 at 2:00, and did a sideways-to-up back-and-fill move to 7017.00 at 2:50. The ES then pulled back to 7012.25 at 3:15, rallied to a new high of 7017.50 at 3:20, traded back down to 7011.00 at 3:45, and was at 7011.50 when the 3:50 cash imbalance showed $1.5 billion to sell. It then traded down to 7004.75 on the 4:00 cash close.

After the close, the ES traded flatlines and settled at 7004.00, up 43 points or +0.62%. The NQ settled at 25,938.25, up 250.75 points or +0.98%; the YM settled at 49,726.00, up 233 points or +0.47%; and the RTY settled at 2,636.90, up 18.50 points or +0.71%.

In the end, the ES did make new all-time highs after the jobs report, but the annual payrolls gain of 584,000 for 2025 is the worst year outside of a recession since 2003. In terms of the indexes’ overall tone, they all acted firm. In terms of the ES’s overall trade, volume was low but remained in the range it’s been in for the last 5 sessions at 1.27 million.

I, and most of the investing and trading community, thought the U.S. Supreme Court would issue a verdict on the implications and legality of Trump’s global tariffs on trade partners on Friday. The Supreme Court’s non-argument session generated considerable anticipation and media hype over potential opinions in two major cases: Louisiana v. Callais (a Voting Rights Act redistricting dispute) and Learning Resources v. Trump (a challenge to presidential tariff authority).

Instead, the Court delivered only a routine decision in Bowe v. United States, a technical habeas corpus case that was a win for the petitioner. The courtroom was sparsely attended, with the public gallery half-full and the bar section nearly empty—except for a small group of Pennsylvania lawyers being admitted to the Supreme Court Bar.

However, Solicitor General D. John Sauer’s unusual appearance with several deputies fueled speculation about the tariff case he had argued. After Chief Justice Roberts announced the opinion, Justice Sotomayor paused before her summary to deliver a deadpan remark to the Solicitor General’s team at the counsel tables: “Seeing who’s here, it’s not the case you thought”—prompting chuckles throughout the room, including from the press section.

The brief session concluded quickly after bar admissions, with no rulings in the blockbuster cases. The Court has indicated possible opinions as early as the following Wednesday or later in the January sitting. The next non-argument day is scheduled for Friday, February 2.

On Tap

Monday:

Tuesday:
President Trump is scheduled to speak in Detroit, Michigan, addressing the Detroit Economic Club at 2:00 p.m. at the MotorCity Casino Sound Board Theater. He will follow the speech with a tour of a Ford factory. The event comes just ahead of the Detroit Auto Show (January 14–25).

Today’s BTS Levels:

ES H

The bull/bear line for the ES is at 6997.25. This level defines today’s directional bias and is the key pivot for trade location.

ES is currently trading around 6961.00 in the Globex session, holding below the bull/bear line. Acceptance below 6997.25 keeps the tone bearish and favors selling rallies rather than chasing strength.

On the downside, initial support is at 6960.75, followed by 6954.25. A sustained break below 6954.25 opens the door to 6926.50, which is the lower range target for today. Failure to hold there exposes 6899.25 and potentially 6855.50 if downside momentum accelerates.

On the upside, resistance comes in first at 7005.00 and then at 7017.50. A push above 7033.75 would shift focus toward 7068.25, which is the upper range target. Bulls need acceptance back above 6997.25 to neutralize the bearish structure and open the door for rotation higher.

Overall, the ES remains bearish below 6997.25. Until that level is reclaimed and held, rallies are vulnerable to rejection and continuation lower.

NQ H

The bull/bear line for the NQ is at 25,883.25. This remains the key pivot for today and defines directional bias.

NQ is currently trading near 25,717.00 in the Globex session, holding below the bull/bear line. As long as price remains below 25,883.25, the tone stays defensive with sellers in control.

On the downside, initial support sits at 25,725.00, followed by 25,699.50. A clean break lower targets 25,674.00, which is the lower range target for today. Failure to hold 25,674.00 opens the door to 25,615.50 and potentially 25,477.25.

On the upside, resistance comes in at 25,938.25 and then 25,985.50. A sustained reclaim of 25,883.25 shifts the bias higher and sets up a move toward 26,092.50, the upper range target. Acceptance above 26,092.50 would signal stronger upside continuation.

Overall, NQ remains bearish below 25,883.25. Bulls need acceptance back above this level to regain control and press toward the upper range.

Polaris Trading Group Summary – Friday, January 9, 2026

Friday wrapped up the trading week on a strong note, with several key levels fulfilled, solid technical execution, and valuable lessons reinforced throughout the session. PTGDavid guided the room with clarity and precision, helping members stay focused and disciplined in both strategy and execution.

Market Overview & Strategy

Successful Trades & Key Levels Fulfilled

Lessons & Education

Closing Notes

Takeaways

DTG Room Preview – Monday, January 12, 2026