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Shorts Pressed, News Flipped, and Boom — Another Pit-Style Reversal
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Our View
All I can say is “risk off, risk on.” Most of the recent sell-offs have occurred on Globex, where lows are made; traders buy the lower open and then push back up for a reversal. However, yesterday was different: the shorts piled in, but most of the news was positive.
With Trump’s new pick set to run the Fed, reports suggest the Fed won’t raise rates this year and will instead implement more rate cuts. I knew how this decline would end; when news surfaced about the US and Iran negotiating, I knew it would catch the shorts off base.
Our Lean
As I said in yesterday’s LEAN, our lean remains: I can’t rule out a breakthrough between Trump and Iran, but until then, I still think the play is selling the “dead cat” rips.
What I left out was the tendency to sell on the last day of the month, followed by buying going into the new month. Additionally, HandelStats noted that Monday—the first trading day of February—is a statistically positive day, and today is a 76% “up” day.
Our lean: We can’t rule out some selling after such a big jump, but with the ES at 7013 on Globex, it is only 30 points away from its all-time high and within shooting distance of Dow 50,000.
Levels
Resistance: 7036.25, 7043, 7050, 7066, 7078, 7095, 7105
Support: 6995, 6989, 6973, 6960, 6946, 6932, 6924, 6917, 6905, 6898, 6886, 6883, 6879
Ballooning deficits and higher rates are colliding faster than many expect
JP Morgan CEO Jamie Dimon delivered one of his bluntest warnings yet on the state of U.S. government finances, arguing that the nation’s rapidly growing debt load is simply “not sustainable.”
Speaking during a fireside chat with Carlyle cofounder David Rubenstein at a U.S. Chamber of Commerce event, Dimon cautioned that the U.S. cannot continue borrowing recklessly without serious consequences.
Key Takeaways
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Debt is accelerating: The U.S. national debt stands near $38.4 trillion, with roughly $2 trillion added annually, putting total debt on track to exceed $40 trillion soon.
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The pace is relentless: According to the Joint Economic Committee, debt has increased by nearly $8 billion per day over the past year — about $112,000 per person.
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Interest is becoming a major budget strain: Analysts project interest payments alone could exceed $1 trillion by fiscal 2026, sharply limiting fiscal flexibility.
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Economic pressure is building: Dimon warned that rising debt, higher interest costs, and market volatility are converging at a dangerous moment.
The Bigger Risk
Dimon described the U.S. economy as being squeezed by two powerful “tectonic plates”:
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One domestic and policy-driven
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The other global and far less predictable
If these forces collide, he warned, the impact could ripple through an already fragile financial system.
While AI-driven productivity gains may provide some long-term relief, Dimon and other experts remain cautious about whether innovation alone can offset the scale and speed of the current debt trajectory.
From Jeff Hirsch from @AlamancTrader
Barometer Rules: No Other Month Comes Close
January is now officially in the books—and with the S&P 500 up 1.4%, our January Barometer for 2026 is positive. This is the best thing for the market. When S&P 500 finishes up in January the full year is higher 41 of 46 times (89.1%). The average full-year gain is 16.9%. The next 11 months went up 87.0% of the time with an average gain of 12.2%. When it’s down, the year is up only 50% of the time with an average loss of -1.7% and the next 11 months are up 60% of the time with a paltry average gain of 2.1%.
January Barometer rules because no other month exhibits as much outperformance when the month is up versus down on the following 11-months or 12-months return. Since 1938, when the S&P 500 was up in January, the next 11-months average a gain of 11.8%. When January is down, the next 11-months average plummets to just 1.2%. In years with a positive January, the next 11 months have historically outperformed a down January by 10.6%. Over the following 12 months, the outperformance grew to 11.5%. As you can see from the bar chart, no other month comes close to this outperformance gap.
What a Positive January Means for 2026
With January 2026 now firmly positive, we’ve locked in the most important early signal of the year. This reading feeds directly into my broader Midterm Year outlook, the 4-Year Cycle, and what I believe remains a powerful AI Tech Super Boom still unfolding beneath the surface.
The key question now isn’t whether January matters—it’s how investors and traders should position for what historically follows. That’s where things get interesting.
Join Me for a Free January Barometer Webinar
I’ll be breaking all of this down—step by step—in a free public webinar where I’ll explain how this positive January Barometer is shaping my outlook for the rest of 2026 and beyond.
FREE WEBINAR
January Barometer Rules: 2026 Midterm Year Forecast Update
Wednesday, February 11, 2026, at 4:00 PM EST
Register here:
https://attendee.gotowebinar.com/regi…/7049066255831151961
During the webinar, I’ll cover:
• What the January Barometer is signaling for the rest of 2026
• How the Midterm Year and 4-Year Cycle are lining up
• Seasonal sector and ETF opportunities currently on my radar
• Off-the-radar AI and tech stocks positioned to benefit from the ongoing AI arms race
I’ll also explain why I believe 2026 could set up the next major buying opportunity, and why a move of as much as 50% from the 2026 low to the 2027 high is not out of the question.
Stay Ahead With Almanac Investor
If you want to stay on top of these signals as they develop, consider joining my Almanac Investor e-newsletter. Members receive weekly market updates, key seasonal insights, and my latest stock and ETF ideas.
For a limited time, you can save up to 54% and receive a FREE copy of the 2026 Stock Trader’s Almanac when you join.
Join Almanac Investor here:
https://stocktradersalmanac.com/…/get-Almanac-for-free…
January has spoken—and history suggests it’s worth listening.
Market Recap
There were several extreme moves on Globex; while I won’t list them all, the ES traded down to 6864.25 before recovering to 6947.00 by 9:00 AM on heavy volume of 410k and opened Monday’s regular session at 6943.50. After the open, the ES dipped to 6941.50 and then rallied to 7005.25 by 10:20 AM—marking a 125-point recovery from the Globex low and a 63.75-point gain from the day’s session low.
Following that high, the ES pulled back to 6986.75 at 11:05, rallied back to 7004.75, and dipped again to 6992.50 at 11:45. It then climbed to 7013.25 at 12:10, pulled back to 7007.00, and engaged in a ‘sideways-to-up’ back-and-fill, reaching 7017.50 at 12:55.
After a pullback to 7004.00 at 1:20, the ES traded back up to 7016.75, saw a minor dip, and formed a lower high at 7015.75. Out of the blue, the market dropped to 6998.00 as a 3:00 PM sell program hit the tape. It rallied back to another lower high before selling off again to 6998.50.
It then caught a slight bid to trade at 7004.00 as the 3:50 PM cash imbalance initially showed ‘small to buy’ before flipping to $950 million to buy. It eventually traded at 7000.00 on the 4:00 PM cash close. After 4:00 PM, the ES traded back up to 7007.50, flatlined, and settled at 7002.50. This represented an increase of 36.75 points (+0.53%) and a 153-point recovery from the Globex low.
Elsewhere:
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The NQ settled at 25,850.00 (up 180 points or +0.70%, and 669.25 points off its Globex low)
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The YM settled at 49,523 (up 515 points or +1.05%, and 1,017 points off its Globex low)
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The RTY settled at 2,650.30 (up 25.70 points or +0.98%, and 90.4 points off its Globex low)
As I have said many times… everything is moving!
On Tap
Before Open: Pfizer (PFE), Eaton (ETN)
Data: 9:45 – S&P Services PMI; 10:00 – JOLTS / ISM Services
After Close: AMD (AMD), PayPal (PYPL), Super Micro (SMCI)
Standout Movers (Mostly Tech/AI Names Crushing It)
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Super Micro Computer (SMCI): +8.9%
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Nvidia (NVDA): +4.3%
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Tesla (TSLA): +4.0%
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AMD: +3.9%
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Broadcom (AVGO): +3.6%
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Others like Meta, Microsoft, and Apple also up solidly in the 2–3% range
Commodities & Crypto
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Crude Oil: +1.67%
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Gold: +0.47%
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Bitcoin: +1.96%
MiM
Market-on-Close Recap – MiM
Monday’s Market-on-Close auction opened with a clear buy-side bias that intensified through the 15:53–15:54 window, where total imbalances peaked near $979M. Early snapshots showed heavy gross activity on both sides, but the buy programs consistently outweighed sell pressure until the final minutes. As the clock ticked toward 16:00, imbalances compressed sharply, flipping briefly negative before settling with a modest net buy, a classic late-day offset that signaled execution-driven rebalancing rather than panic liquidation.
Sector flows told a more nuanced story. Financial Services and Industrials stood out with strong buy leans, both above +69%, signaling institutional accumulation rather than rotation. Consumer Defensive and Utilities also carried notable positive leans, suggesting a defensive overlay paired with core allocation adds. In contrast, Technology was a clear outlier on the sell side, posting a -71% lean—well beyond the -66% threshold—marking wholesale distribution. Energy and Real Estate similarly showed heavy sell pressure, reinforcing that the late-day selling was targeted, not broad-based.
At the symbol level, sell imbalances were dominated by mega-cap technology. NVDA, AAPL, ORCL, AVGO, and PLTR all appeared prominently, confirming that the Technology sector sell skew was driven by size and concentration, not breadth. Communication Services added to the downside via GOOGL and GOOG, while XOM anchored Energy selling. On the buy side, Utilities and Financials led, with GEV, VZ, MS, C, and WFC absorbing steady demand, indicative of portfolio reweighting into yield and balance-sheet strength.
Index-level summaries reinforced this split. NYSE finished with a strong positive imbalance and a +61% buy lean, while NASDAQ closed deeply negative at roughly -75%, an extreme reading that underscored aggressive tech selling. The S&P 500 sat near flat, reflecting internal rotation rather than directional conviction.
Overall, this MOC was defined by decisive sector and symbol rotation: institutional buyers selectively accumulated defensives and financials, while distributing technology into the close.
Technical Edge
Fair Values for February 3, 2026:
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SP: 24.64
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NQ: 108.01
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Dow: 108.97
Daily Market Recap 📊
For Monday, February 3, 2026
• NYSE Breadth: 53% Upside Volume
• Nasdaq Breadth: 56% Upside Volume
• Total Breadth: 55% Upside Volume
• NYSE Advance/Decline: 59% Advance
• Nasdaq Advance/Decline: 57% Advance
• Total Advance/Decline: 58% Advance
• NYSE New Highs/New Lows: 166 / 73
• Nasdaq New Highs/New Lows: 223 / 290
• NYSE TRIN: 1.31
• Nasdaq TRIN: 1.06
Weekly Breadth Data 📈
For Week Ending Friday, January 30, 2026
• NYSE Breadth: 46% Upside Volume
• Nasdaq Breadth: 46% Upside Volume
• Total Breadth: 46% Upside Volume
• NYSE Advance/Decline: 47% Advance
• Nasdaq Advance/Decline: 35% Advance
• Total Advance/Decline: 39% Advance
• NYSE New Highs/New Lows: 452 / 119
• Nasdaq New Highs/New Lows: 667 / 458
• NYSE TRIN: 0.99
• Nasdaq TRIN: 0.64
ES & NQ Levels (Premium only)
ES – H26 Levels
The bull/bear line for the ES is at 6977.75. This level remains the key pivot for today. Acceptance above it would shift the tone back toward responsive buying, while continued trade below keeps pressure on rallies.
ES is currently trading around 7022.00, attempting to stabilize after recent volatility. Holding above 7002.50 keeps price within the upper half of the recent range and opens the door for a rotation higher toward 7050.50, which marks today’s upper range target. A sustained push above 7050.50 would put 7118.75 back in play as a stretch resistance area.
On the downside, initial support sits near 6938.50, followed by 6905.25 as the lower range target. Failure to hold 6905.25 increases the risk of liquidation toward 6864.50, with a more extreme downside scenario extending to 6836.75 if selling accelerates.
Overall, price is slightly constructive while above 6977.75, but the broader context remains two-sided. Expect responsive trade around the bull/bear line and range-bound conditions unless price decisively accepts above 7050.50 or breaks below 6905.25.
NQ – H26 – Levels
The bull/bear line for the NQ is at 25,736.00. This remains the key pivot for directional bias. Holding above this level keeps the door open for responsive buyers, while acceptance below shifts control back to sellers.
NQ is currently trading around 25,988.25 after a sharp overnight rotation. Above the bull/bear line, upside targets sit at 26,133.25 and then 26,507.00. A clean push and hold above 26,133.25 would signal momentum continuation toward the upper end of the range.
If price fails to hold above 25,736.00, downside pressure likely increases. Initial support is at 25,530.00, followed by 25,338.75, the lower range target. A break below 25,338.75 opens risk toward 25,180.25, where buyers must respond to avoid a deeper liquidation.
Overall, the NQ remains range-bound but volatile. Bulls want acceptance above 25,736.00 and continuation through 26,133.25. Bears regain control below 25,736.00, targeting the lower range levels. Expect two-sided trade and fast rotations.
Calendars
Economic Calendar
Today
Important Upcoming
Earnings
Recent
Trading Room Summaries
Polaris Trading Group Summary – Monday, February 2, 2026
Monday opened with some tech turbulence but turned into a technically clean and strategic trading day. The room navigated Cycle Day 2 dynamics effectively, focused on structure, and emphasized patience and discipline in trade execution.
Morning Session Highlights:
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Technical Issues: The day began with streaming/audio issues due to new security protocols. Despite this, the group persisted through disruptions with positive attitude and collaboration.
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Opening Support Identified: David marked 6930 as dynamic support early.
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Key Levels Traded:
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LIS reclaimed at 6965, suggesting bull control if sustained.
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Resistance noted at 6975 with large block volume, prompting cautious play.
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Strategy Focus:
David stressed a “Long Lean” bias, but only on proper pullbacks – “no chasing” was emphasized. -
Price Action: Strong recovery early led into a sandbox range between 6990 – 7005, which held most of the session.
Cycle Day 2 Gameplay:
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David clarified textbook CD2 structure: backtest and trend continuation.
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The market followed a rhythmic, controlled pace.
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Perfect pullback from D-Level (7005) offered a textbook long setup — an excellent learning opportunity for structural trading.
Afternoon Developments:
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“Wabbit Hunt” to the upside teased a break from the range, as price advanced.
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A discussion with Ram confirmed Tuesday may be a “Wild Card” Day due to potential fulfillment of the cycle’s rally metrics.
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Target @ ES 7025 remained in play into the close.
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Bruce F executed a DLMB trade cleanly, earning praise from David – a highlight of applied PTG methodology.
Lessons & Wins:
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Patience Pays – waiting for structure (D-Level pullback) produced high-quality setups.
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Adaptability – the team worked through tech issues without missing key trade opportunities.
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Market Rhythm Awareness – CD2 dynamics played out as anticipated, reinforcing the value of cycle-based planning.
Summary: Despite a rocky start tech-wise, PTG members stayed focused and capitalized on clean structural trades. A solid Cycle Day 2 with strong execution and key learning moments.
Discovery Trading Group Room Preview – Tuesday, February 3, 2026
Market Focus:
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Eyes are on corporate earnings and JOLTS Job Openings (10:00am ET), with Fed speakers Barkin (8:00am ET) and Bowman (9:40am ET) on deck.
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Broader themes include Trump-era tariffs, Fed Chair nomination chatter (Kevin Warsh), and developments in the AI/space tech sector.
Macro & Geopolitics:
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Australia: RBA hiked rates 0.25% to 3.85% to combat sticky inflation (now 4.35% YoY).
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Elon Musk: Merges SpaceX and xAI to explore space-based AI data centers.
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Trump Trade Moves:
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US-India deal lowers tariffs to 18% (was 25%) in exchange for pivot away from Russian oil.
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Threats of major tariffs on Canada (EVs), Mexico (oil to Cuba), and South Korea over trade grievances.
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Earnings:
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Premarket: ADM, ETN, FOXA, MPC, MRK, OMC, PYPL, PEP, PFE
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After the Bell: AMD, AMGN, MDLZ, EA, TTWO, and others
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Wednesday AM: ABBV, LLY, UBER, YUM, UBS, etc.
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Palantir (PLTR) up 6% AH on strong Q4 and raised guidance.
ES Futures Outlook:
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Strong bounce from Monday’s low to near ATH (~7043).
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Watching resistance at 7080/85 (inside TL) and 7264/69.
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Support zones: 6922.50 (50-day MA), 6873/78, 6750s.
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Volatility remains high but may contract if ES holds breakout.
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Whale bias leans bearish, but overnight volume light.
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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!
This post goes out as an email to our subscribers every day and is posted for free here around 2 PM ET. To get your real-time copy, sign up for the free or premium version here: Opening Print Subscribe.
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