Market Update

January 14, 2026

In my write-up earlier this week I noted that the S&P500 looked increasingly vulnerable to a 3% sell-off.  The successive moves to new all-time highs had no energy, and the market frankly looked tired. Compared to the explosive moves in silver (see below) and copper, the stock market looked more like a very tired old man crawling slowly up a hill. Without a sharp impetus to bring some renewed life into the market, I was expecting the market to simply run out of gas and start to break lower.  Is this an exact science?  Not at all.  But after studying the markets for forty years, and trading successfully in pretty much every type of market environment, this move was becoming pretty obvious.  

As you can see, the down move is still in the very early stages, and it is unclear whether this will be a more structural decline of major proportions or just a short-term cleansing to shake out a number of weak long positions.  I am open to both ideas right now, but you should all pay very close attention over the coming days and weeks.  If this turns out to be a more structural top, then we will be looking at a huge reversal pattern that will last many months, or longer.  

Looking at the charts of the S&P500 and Silver, it is glaringly obvious which of these markets looks more alive!  Clearly silver is on a massive tear, and that tells us a very interesting story by itself.  Sure, right now silver is in a parabolic ascent that will have a vicious correction at some point, but it is warning us about some deep underlying issues that are simmering in the global economy. The artificial stimulus that the authorities have pumped into the system since the Great Financial Crisis has been massive, but it has not been delivered without serious associated risks.  In the next piece, I’ll explore how the cumulative distortions from artificial liquidity -- QE, fiscal expansion, and regulatory forbearance -- have created a market structure that’s increasingly brittle.  The surges in the precious metals are triggering panic buttons every major central bank, and calm, soothing talk won’t make the problems go away.

I have positioned myself for this short-term sell-off with a short-dated put spread as I wanted to have a simple, limited-risk way to prosper from a down move without taking on much risk.  I have a lot of respect for the power of a long-term uptrend in stocks, so I didn’t want to have any open exposure that could cause some serious pain in case the market suddenly got some unexpected new impetus.  The sorts of things that could propel the market sharply higher might now seem increasingly unlikely:  e.g. a dovish surprise from central banks, a geopolitical de-escalation, or a breakout in earnings or liquidity metrics.

In fact, these things look quite unlikely In the near term, which is why I have been focusing on a short-term play in the markets.  If a major turn starts to develop, we will all have lots of time to capture major chunks of the move.  Remember, historically, when major tops occur in the equities, the initial part of the reversal typically lasts a few months.  We will have plenty of time to get on board.

In the meanwhile, I want to wish you all the best of luck with your trading.

Navigating these markets might be quite tricky.

Andy Krieger