Charted Market Insights - Jan. 6, 2026

Stephen Suttmeier
Jan 6
8 min read

*** Please see the bottom of this report for important disclaimers and disclosures.***

SPX plus breadth, RSP, IWM, Dow Theory, and seasonality

SPX: Solid breadth indicators support the case for higher highs

The S&P 500 (SPX) remains in an uptrend and continues to trade within a potential bullish consolidation pattern. While a decisive price breakout has so far been elusive, underlying market breadth remains solid. Strength in the SPX advance-decline line, volume advance-decline line, the percent of stocks above their 100-day moving averages, and the spread between 52-week highs and 52-week lows all support the case for higher highs on the SPX.

SPX must decisively clear 6920–6946 to confirm bullish pattern and target 7300

While solid breadth indicators remain supportive, the SPX must decisively break above 6920–6946 to confirm its bullish consolidation pattern and suggest further upside to 7300. Until then, the rising 13-, 26-, and 40-day moving averages at 6860–6804 underpin the bullish backdrop ahead of important tactical chart support at the mid-December low of 6721 and the late-November low near 6521. Notably, the daily Ichimoku cloud span aligns closely with the mid-December low, reinforcing the significance of that support.

RSP: Bullish wedge increases potential for a bullish breakout and retest pattern

The Invesco S&P 500 Equal Weight ETF (RSP) is attempting to break out from an early December into early January bullish wedge pattern. Completing this pattern would mark a retest of the breakout from RSP’s early October into early December basing pattern and suggest tactical upside to 199.28 (61.8% extension), 202.50 (pattern count), and 204.39 (100% extension). Chart levels and the rising 26/40-day moving averages offer key support at 192.41-190.45.

IWM: Bullish wedge rhymes with and corroborates the bullish wedge on RSP

Similar to the RSP, the iShares Russell 2000 ETF (IWM) has firmed up within a potential early December into early January bullish wedge. A decisive push above 250-251 would confirm this pattern and signal upside potential beyond the December high at 258.20 toward 263.97 (61.8% extension), 275.16 (100% extension), and 282.50 (target for the breakout from a late 2024-mid 2025 bullish head and shoulders pattern). If IWM begins to struggle, it is important to hold retracement levels for the 11/20-12/12 rally at 247.00 (38.2%), 243.55 (50%), and 240.00 (61.8%).

Mixed signals from Dow Theory

The traditional Dow Theory is on a confirmed buy signal with both the Dow Industrials and Dow Transports reaching new highs yesterday (1/5). However, the non-traditional Dow Theory using the broad-based NASDAQ and NYSE Composites shows an early December into early January non-confirmation. A push to new highs on the NASDAQ is required to confirm the new highs on the NYSE and put this version of Dow Theory back on a confirmed bullish signal. See our Tech Speak 101 from October 2 for more on the Dow Theory.

Jan can be stronger after a below average Dec, but 1Q and 1H tend to struggle

The SPX was down 0.05% in December, well below the average December gain of 1.27%. Historically, January tends to be stronger following a sub-par December, with the SPX posting an average January return of 1.68% (2.13% median). However, performance later in the year has typically been more challenged after a lackluster December. Under this scenario, the SPX is higher 54% of the time in the first quarter, with an average return of 0.96% (0.31% median), and higher 59% of the time in the first half, with an average return of 1.88% (1.77% median). These results are meaningfully weaker than historical 1Q and 1H returns across all years and following above-average Decembers.

S&P 500 shows solid market breadth

SPX: Solid breadth indicators support the case for higher highs

Breakout and retest for SPX A-D line is a bullish signal

A breakout and retest for the SPX advance-decline (A-D) line provides a bullish leading indicator for a breakout on the SPX.

Chart 1: S&P 500 (top) and S&P 500 advance-decline line (bottom): Daily chart