Where the Pressure Is Building

1) GOLD – The bull market in gold is clearly not over.  Last week, I discussed the potential for gold to tap TREND (was $4,247 then) and then decide what’s next.  On WED 12/31, gold hit a low of $4,274 and bounced.  That was a signal as gold volatility (GVZ) failed at its TREND.  Volatility failing at TREND resistance is always good for price, and today we have gold at $4,422, +2% and breaking back above TRADE resistance in a meaningful way.  What does this tell us?  Gold is still in a bull run with strong support in the $4,282 to $4,350 areas.  Those are the “add” spots.  The top end of the daily trade signal is also signaling new all-time highs for gold at $4,582.  Good signal as well.

2) ENERGY – Nobody likes energy stocks. And it's not hard to see why.  For most investors, energy has been a graveyard since the Great Financial Crisis, sporting roughly a 2% to 3% annualized return since then.  The performance gap between energy and tech is enormous.  It’s that kind of gap where investors stop paying attention, and eventually, an entire sector gets written off as uninvestable.  And yet, as we begin 2026, something interesting is happening.  One of the most important energy stocks (XOM) in the world is quietly pushing to new highs.  This isn’t a call to buy XOM, but a signal that energy is worth paying attention to.  There has been a lot of uncertainty and armchair forecasting this weekend due to the Venezuelan situation.  That sort of “noise” tends to show up right before outsized moves.  Am I saying energy is going to become the leader?  No.  But the sector is getting attention now as we see a leader break to new highs.  Remember, sector rotation is the lifeblood of a bull market.  Energy may be the next sector that benefits from that rotation.

3) VIX – Volatility of Volatility (VVIX) failed Friday right at its TRADE resistance level of 96.45.  That’s good when VIX’s volatility is under control.  I’ve mentioned before that VVIX often leads VIX, and VIX often leads the S&P 500.  Frankly, everything else is noise: opinions, feelings, ideas, beliefs, past patterns, newsletters.  Noise.  I know…it’s so simple that most just can’t accept it.  Nevertheless, VVIX movement is important in understanding how the “machine” might move.  And right now, volatility is quiet and hedging continues to be fairly strong.  Implied Volatility for the S&P 500 proxy (SPY) is at a healthy 47% versus one-month realized volatility.  A week ago, it was at 22%.  Rising hedging activity is good.