New All Time Highs For SPX. Now What?

Analyzing the markets with Richie Naso, a Wall Street veteran of over 40 years and former member of the NYSE.

• DJIA 52-wk: +18.04% | YTD: +3.00% | Wkly: +2.32%
• S&P 500 52-wk: +19.55% | YTD: +1.76% | Wkly: +1.57%
• NASDAQ 52-wk: +23.54% | YTD: +1.85% | Wkly: +1.88%
• Russell 2000 Index 52-wk: +19.87% | YTD: +5.73% | Wkly: +4.62%

Weekly Summary:
U.S. equity markets powered through the first full trading week of 2026 with solid gains, closing out with fresh record highs in key benchmarks. The Dow Jones Industrial Average and S&P 500 both closed at all-time highs on Friday, while the Nasdaq also finished the week notably higher as investor optimism built early in the year. Investopedia+1

Index Performance:
• S&P 500: climbed and ended the week at record levels, buoyed by strong gains in tech and broad market sectors. Nasdaq
• Dow Jones Industrial Average: continued its rally, surpassing 49,000 and closing at fresh highs. Nasdaq
• Nasdaq Composite: rose for the week, with tech stocks leading much of the gains. MarketWatch

Market Drivers:
• Economic Data: A mixed jobs report showing fewer hires but a slightly better-than-expected unemployment rate reinforced expectations that the Federal Reserve would keep interest rates steady, supporting equities late in the week. AP News
• Tech Strength: Growth in semiconductor and large cap tech shares helped lift the indices, with strong performances from companies like Intel and broad interest in AI-related names. The Motley Fool
• Sector Rotation & Geopolitics: Energy and defense stocks saw notable activity amid geopolitical developments, while broader sector participation helped the overall market advance. Yahoo Finance

Volatility & Sentiment:
The first full trading week also marked a return of normal liquidity after the holiday-shortened prior week, with positioning adjustments and macro data releases driving intra-week swings. Investors weighed geopolitical news, earnings expectations, and labor data as markets resumed full activity. LPL Financial

Bottom Line:
The week of January 5–9 was broadly positive for U.S. stocks, with major indices advancing, key benchmarks setting new highs, and investor sentiment supported by economic data and optimism around technology and cyclical sectors. Investopedia+1

The Paul Tudor Jones "1999 Bombshell"

If you caught billionaire trading legend Paul Tudor Jones on CNBC's Squawk Box recently, you heard a startling comparison. He dropped a bombshell, stating that the current market "feels exactly like 1999" and advising you to "position yourself like it's October 1999."

Why does this matter to your portfolio? If Jones is right, you might still have "plenty of meat left on the bone." Between 1999 and 2000, Nasdaq actually doubled. Jones believes the current market could be even more powerful than that legendary run.

HOMEBUILDERS AND OTHER COMPANIES:

Involved in the housing market were strong in their first trading after President Trump announced a plan to lower mortgage rates. Mr. Trump on late Thursday called for the purchase of $200 billion in mortgage bonds, similar to how the Fed in the past has bought bonds backed by mortgages to bring down mortgage rates.

Key Points

About This Summary

• Gold and silver prices, along with industrial metals, face heightened volatility as two major commodity indexes rebalance.
• Gold’s weighting in the BCOM index will likely decrease from 20.4% to 14.9% due to a rule limiting single commodity weightings to 15%.
• Combined selling of gold and silver futures could reach $6 billion to $7 billion in each metal during the rebalancing window.

Gold and silver prices, as well as those for industrial metals such as copper, are likely to see heightened volatility over the coming week as two major index providers rebalance the weights of the global commodity benchmarks.

Both the Bloomberg Commodity Index, as well as the S&P Goldman Sachs Commodity Index, will undergo an annual five-day process of resetting their closely tracked indexes to reflect charges in commodities’ futures prices.

Last year’s historic gains for precious metals, including the 150% advance in silver SI00 +6.24% prices and the best year for gold prices since 1979, left the two metals with unusually high weightings compared with the indexes’ other components.

Rebalancing will bring their weights in line with predetermined rules, based on liquidity and production data, allowing for a more accurate representation of the global commodities complex. Gold’s GC00 +1.30% Weighting in the BCOM index, for example, will likely be reduced from 20.4% to 14.9% to reflect the rule that “no single commodity can exceed a 15% weighting.”

That will also likely trigger big flows of trading orders from funds that track the indexes as they move to match the new weightings.

The changes will start to take place on Friday, while trading to match the anticipated reshuffle is expected to begin today. Passive investors generally start selling the day before a rebalancing to minimize so-called tracking errors that can occur once changes are enacted.

“Following last year’s exceptional performance, precious metals will have to absorb some of the largest notional rebalancing flows across the commodity complex,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Bank estimates suggest that combined selling of gold and silver futures could reach $6 billion to $7 billion in each metal during the rebalancing window.”

Silver prices are already starting to reflect some of the anticipated selling. Futures have fallen more than 9% from the record of $82.36 an ounce reached earlier this week.

Gold futures have eased more modestly, falling around 2% from this week’s peak of $4510.10 an ounce. Copper HG00 +1.60% futures are down around 5% from their level early in the week. In mid morning Thursday, they were trading at around $5.82 a pound on Comex.

Deutsche Bank analyst Michael Hsueh sees gold as being uniquely affected by the rebalancing. He noted that the rebalance early in 2025 stands out as “one year when a reduction in the gold weighting coincided with an upward move in the gold price over the rebalancing window.”

Gold prices took off after the indexes were adjusted last year. But this year, it could play out differently.

“The impact of 2.4 million ounces of gold selling may be worth 2.5% to 3.0% on the gold price,” he said in a recent note.

The effects of the index rebalancing are likely to be isolated to the futures and paper markets for gold, silver and copper. They won’t change the underlying demand dynamics for precious and industrial metals heading into the new year.

Shortages of silver, gold demand backed by central bank purchases, and depleted copper stockpiles overseas, a result of U.S. tariff-related buying, are expected to help support prices over the coming months.

But market reaction to the big index rebalancing will still offer insights into how confident investors are about the prospects that last year’s metals’ rally can continue.

“If gold and silver stabilize or rebound despite ongoing mechanical selling, it would signal strong underlying demand and suggest that recent rallies were not purely momentum- or FOMO-driven,” said Hansen at Saxo Bank.

“Conversely, an inability to absorb these flows could point to a more fragile positioning backdrop and raise the risk of a deeper, albeit still technical, correction,” he added.

Earnings Season Begins in Earnest
• Major U.S. banks — including JPMorgan, Bank of America, Wells Fargo, and Citigroup — are scheduled to report quarterly results next week. Expectations around earnings growth and credit quality commentary will be one of the first big reality checks on economic resilience early in 2026. Kiplinger

• Gold and silver prices, along with industrial metals, face heightened volatility as two major commodity indexes rebalance.

FINAL THOUGHTS FROM LAST WEEKS (1/5) LETTER:

I expect the first week of the year to be positive. After that I become cautious.

Bank earnings are going to have a huge effect going forward.Pay close attention to these results.

Last year’s historic gains for precious metals, including the 150% advance in silver prices and the best year for gold prices since 1979, left the two metals with unusually high weightings compared with the indexes’ other components.

Rebalancing will bring positions back in line with predetermined weightings. Given current metal price levels, this process is likely to create a sell-side imbalance.

I’m cautious about the stock market this week and lean to the sell side.

— Richie

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