Three Bearish Factors – 01/01/26

Early January 2026 could be the cusp of a multi-month decline for U.S. stocks.

The first bearish factor is potential Fibonacci resistance.  The daily SPX chart courtesy of Trading View illustrated in this website 12/27/25 blog is reposted below.

SPX 12/27/25 peak was 6,945.77 close to and within leeway of major Fibonacci resistance at 6,958.48.   It’s possible a major SPX peak may already be in place. 

What if a top is not in place?  The 30 – minute SPX chart illustrates an Elliott wave count that could be a developing second bearish factor.

R.N. Elliott said Ending Diagonal Triangles appear after a market has moved too far and too fast.

Moving too far too fast is what’s happened to SPX since the April 2025 bottom.  For the last few months there have been several possibilities of an Ending Diagonal Triangle forming – none have developed. If SPX can rally to a new marginal all-time high in the next one or two trading days an Ending Diagonal Triangle could complete.

Ending Diagonal Triangles occur in the fifth wave position of motive patterns and in the “C” wave position of corrective patterns.  They are termination moves of the next larger degree wave.  Composed of five sub waves each of which further sub divides into three waves.  The movement forms within converging trendlines in which the fourth wave position almost always reaches the territory of the first wave position. 

Frequently there’s a brief throwover of the trendline connecting the third and fifth waves.

If the SPX post 12/27/25 decline continues and goes below 6,970.43, the Ending Diagonal Triangle will be invalidated. 

In Elliott wave theory the third wave position in motive patterns is never the shortest wave.

The presumed Minuette wave (iii) of the Ending Diagonal Triangle is 225.30 points.  Assuming the presumed Minuette wave (iv) low at 6,844.55 holds, the Ending Diagonal Triangle will be invalidated above 7,069.84.

The third bearish factor is time.

Sometimes markets can have significant turns on the cusp of a new year.  Additionally Full/New Moons can occasionally signal market turns plus or minus two trading days.

There’s a Full Moon on Saturday 01/03/26.  

If SPX rallies to an all-time high on 01/02/26 or 01/05/26, a significant peak could be made.

To all a Happy New Year!