01.07.25 Markets: Mom and Dad are Home and are They Pissed

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So the junior traders got their shot and were left very specific instructions:

“Don’t play with the algos boys and girls and not moving our large funds into biotech, crypto funds, or for God’s sake anything that cat guy pushes.”

Based on market activity today, it would appear they didn’t listen even though the junior traders tried hard to make a quick buck over the holidays.

I guess now they are hoping for Kelly LeBrock to appear out of the shower and clean up all the empty liquor bottles they left in the trading offices. Yes, that’s a clear reference to the classic movie Weird Science so calm the hell down.

The day started out looking like the New Year’s rally was finally here. Everything was up, the data at 8:30 a.m. was meh, and nothing lurking politically for once as Biden nor Trump’s microphones were on yet.

Then suddenly at 10 a.m. ET a hot ISM inflation number in conjunction with a suspect JOLTS report and it was off to the races to the down side as all the regulars needed was an excuse to follow all of those corporate officers to the exits. And exit the markets they did indeed but mostly the formerly smoking hot NASDAQ:

I did not bother to mention the total volume on the chart above (provided via the WSJ Market Data) but it was an ALL TIME RECORD HIGH for the NASDAQ today:

13,986,795,895

Let that sink in. On a daily candlestick chart it looks even worse as some technicians call this a “devil’s candle” while other just pray that the current and incoming administrations do not throw gasoline on the fire.

The biggest indicator of risk however is still the blaring warnings from the credit market. The 2s10s and 10 year/3 month have dis-inverted as we have been covering on MacroEdge Radio and is indicative of the bear steepener now moving ahead at light speeds as our team has warned is a possibility.

It’s still hovering around that level at approximately 8 pm ET tonight. The 10 year/3 month has almost overtaken the chart above:

The next areas to flag for monitoring will be the PBOC Yuan setting over the spring in reaction to Trump policies and the Bank of Japan reaction to the deterioration in the value of the Yen. Just remember these pages motto for 2025: Instability breeds instability.

So buckle up my friends and stay tuned as it’s a Weird Science kind of market and who knows if an IRBM might pop through my office floor at any moment.