Master Trader ETF Investment Trader for the Week of 1-5-26

The U.S. stock market closed out 2025 near an all-time high.  The S&P 500 gained 17%, its seventh-best three-year run on record.

The bull party held strong despite artificial intelligence bubble fears, slowing job market, inflation, rates, real affordability complaints, etc.

Stocks were mixed on the first trading day of the new year last Friday with a lot of unusual activity.  The S&P 500 and Dow rose 0.2% and 0.7%, respectively.  The Nasdaq fell less than 0.1% but left many damaged and bearish charts.

The Magnificent 7 had a horrible day after starting off mixed in the morning (see MAGS ETF).  If the weakness continues this week, it will naturally drag the QQQ – and possibly broader markets – down with it.

The Dow has been highly erratic, with wide down-and-up swings, but it remains in an uptrend and set new all-time highs last week.  It closed with a Buy Setup and looks higher over Friday’s high.

On Friday, despite selling pressure throughout the week, capital rotated into defense stocks, oil-related stocks, and select underperformers across multiple sectors.

Early Saturday morning the U.S. commenced airstrikes around Caracas, raided Maduro’s compound, and captured and delivered he and his wife to New York for a criminal trial.

Perhaps this partially explains the institutional reshuffling as well the expiration of quarterly options cycle.

The aggressive selling in big-cap technology, combined with deep or relatively deep retracements across several key areas, raises legitimate concern that the short-term correction that began in December may deepen.

Our internal market gauges have deteriorated but remain neutral.  This distinction is critical.

We require both breadth and sentiment to reach historical extremes together to generate higher-confidence signals. That has not happened.

Breadth is weaker, yes—but not washed out.  Sentiment is cautious—but not panicked.

This is the danger zone for emotional traders. It’s where people feel like something big is about to happen, but the data hasn’t confirmed it yet.

That’s why patience matters here.  The key is selectivity.

This is not a market where buying “the theme” works. It’s a market where structure, trend, and risk management do.

This is precisely the environment where Master Trader Technical Strategies shine—because we are not dependent on market direction. We are dependent on probability and execution.

Short-term signals are mixed.  This is not an “all bullish” market.  It’s also not an “all bearish” one.  It is touch-and-go.

More data—specifically, price action—is needed.

Corrections are normal. Rotation is healthy. Volatility is part of the process.

Our job is not to predict Santa rallies or fear year-end headlines.

Our job is to manage risk, wait for confirmation, and act only when probabilities align.

That discipline has served us well through many cycles—and it will continue to do so now.

As always, we will focus on the highest-probability setups, respect risk when conditions deteriorate, and sit on our hands when patience is the trade.

That is how professionals survive—and thrive—through environments like this.

If you're not in the Green Room with us, log in to YouTube, Facebook, or Twitter to get our pre-market review at 9 AM ET. If you can't make it, you can view the recording.

Good trading.

TREND MATRIX

I reviewed the Trend Matrix in the video below

S&P Sector ETFs – Sorted by Weekly Percent Change

Other ETF Sectors – Sorted by Weekly Percent Change

VIDEO REVIEW OF ETF SECTORS - Click lower right to open Full Screen.

NEW ETF TRADE IDEAS

1/5:  State Street Utilities Select Sector SPDR ETF (XLU) - Over $43.39, consider buying a half lot of the ETF.    Breakout of a bottoming pattern at the 20-MA, Buy Setup, and reversal weekly. Stop $41.74.

1/5:  VanEck Uranium and Nuclear ETF (NLR) - Over $133.93, consider buying the ETF. +WRB Breakout of a bottoming pattern at the 20-MA, bullish retest and reversal weekly.  Stop $123.52.