2026: The Year of Heightened Volatility

Our View

I said last year that 2026 would be the year of volatility, and Trump's intervention in Venezuela—the oil embargo and the capture of its president, Nicolás Maduro, and his wife—is the kickoff to what I believe is going to be a year filled with VIX jumps. I know a lot of people in the US and in Venezuela are cheering, but since the mid-19th century, the US has intervened in its continental neighbors through economic pressure and military force, with a long list of invasions.

Call me paranoid, crazy, or just concerned, but the US is stepping into the unknown—into its own hemisphere. Was I surprised when I woke up Saturday morning? Yes.

What we do know is the S&P does not react well to uncertainty.

So far, Brazil, Chile, China, Colombia, Cuba, France, Iran, Mexico, Nicaragua, North Korea, Russia, South Africa, Spain, and Uruguay have all cited concerns—ranging from violations of international law and sovereignty to regional instability, which is clearly happening.

Let’s face it—Trump’s unpredictability is here for the next 3 years. And it showed up again when he said he could work with Venezuela’s Vice President Delcy Rodríguez, but she would “pay a very big price” if she doesn’t “do what’s right.”

Now Trump is also threatening Colombia, Cuba, Mexico, and Greenland, prompting strong rebukes from Danish and Greenlandic leaders. Even some of Trump’s biggest supporters are questioning the rationale.

Why the attack?
I didn’t have to read anything to answer that question. With the BRICS making headway and the dollar down 9% in 2025, Trump’s move to take over oil production is a way of forcing countries to use the dollar for payment, thus pushing the dollar higher.

When the PitBull called me today (which I knew he would) and asked what I thought, I said gold would be higher (he liked that—he’s long GLD). As for the ES, I told him, “Who knows?” I thought it sounded crazy, but the ES could open higher—which it did. But in all honesty, I have no idea, other than to say Trump may have backed himself into a corner that he can’t get out of.

Our View

There are some big economic reports this week, including the Friday jobs number and week two of options expiration. I think it could be a very volatile week.

The other part about this—something I’ve been saying more than ever since Trump took office—is that the guys with the better seats have been front-running every new headline. The story about an anonymous user setting up an account on Polymarket.com eight days ago and placing a series of wagers worth nearly $34,000 before the assault—and raking in more than $409,000 by Sunday afternoon—predicting that Maduro would be out of office by January 31 and that the US would invoke war powers against Venezuela, send troops to the country, or invade by the same date, is clear proof that someone on the inside knew this invasion was coming.

Just think if you knew this information and bought $1 million in gold or silver?

Market Recap

The ES did what I thought it would do on Globex: it rallied up to 6938.50 and opened the first trading session of 2026 at 6927.75, up 36 points or +0.52%. After the open, the ES traded up to 6932.50, sold off down to the RTH low at 6911.50, then rallied up to 6939.25 at 9:50. It then pulled back to a lower high at 6903.00 and dumped down to a new low at 6873.25 at 11:10 as this story hit Twitter:

After the low, the ES stutter-stepped up to another lower high at 6895.75 at 11:30, then dumped down to a new low at 6871.25. It rallied up to 6897.25 at 12:30, then traded down to fresh lows at 6866.50 at 1:50, before quickly marching back up to the 6908.50 level at 2:37. From there, it sold off to 6897.50, rallied to 6905.50, sold off again to 6889.50 at 3:49, and traded 6891.50 as the 3:50 imbalance showed $2 billion to buy. It traded 6900.25 on the 4:00 cash close and settled at 6900.50, up 8 points or +0.12%. The NQ settled at 25,385.25, down 71.50 points or -0.28%.

In the end, the first trading day of 2026 was a horror show. In terms of the ES's and NQ's overall tone: they acted good early, badly until late in the day, and firmed up going into the imbalance. In terms of the ES's overall trade, volume was higher at 1.5 million contracts traded.

Tail of the Tape

• The ES has been down 8 and up 6 of the last 14 sessions.

• During the 5-day winning streak, the ES gained 204 points or +2.79%.

• During the 4 losing sessions, the ES lost 90 points or -1.30%.

• The NQ has been down 9 and up 6 of the last 15 sessions.

• During the 6 up days, the NQ gained 981 points or +2.71%.

• Over the last 5 down days, the NQ lost 520 points or -1.94% to a two-week low.

On Tap

• Monday: 10:00 am ISM Manufacturing Index and Auto Sales

• Tuesday: 8:00 am Richmond Fed President Tom Barkin speaks, 9:45 am S&P Final U.S. Services PMI

• Wednesday: 8:30 am ADP Employment, 10:00 am ISM Services Index and Factory Orders, 4:10 pm Fed Vice Chair for Supervision Michelle Bowman speaks

• Thursday: 8:30 am Initial Jobless Claims, U.S. Trade Deficit and U.S. Productivity, 4:00 pm U.S. Consumer Credit

• Friday: US Employment - 9:45 am U.S. Employment Rate, U.S. Hourly Wages, U.S. Hourly Wages YoY; Housing Starts, UMich Consumer Sentiment, 1:35 pm Richmond Fed President Tom Barkin speaks

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