S&P 500 (ES)

Prior Session was Cycle Day 2: Post-Xmas Eggnog Edition

The market showed up today with a splitting headache and zero ambition.

After a little too much holiday cheer, price did exactly what Cycle Day 2 is famous for — oscillate, drip, chop, repeat. The lower 6950 ES target was fulfilled per the DTS Briefing (✔️), with NQ exceeding all lower objectives just to make sure no leftover liquidity survived the weekend.

Key takeaway: For greater detail of how this day unfolded, click on the Trading Room RECAP 12.29.25 link.

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…Transition from Cycle Day 2 to Cycle Day 3

Transition into Cycle Day 3: Santa Rally Derailed?

Santa checked the list… twice.
Price action checked the brakes. 🎅🛑

As we roll from Cycle Day 2 into Cycle Day 3, the S&P 500 finds itself flirting with an uncomfortable stat line:

👉 On track for a third consecutive year with no Santa Rally
👉 A first in recorded market history

According to Barchart, that’s not just rare — that’s statistically offensive to every seasonal trader who grew up believing December was free money with sprinkles on top.

Cycle Day 3, by nature, is where truth gets revealed:

• Momentum either reasserts itself

• Or distribution finishes the job Cycle Day 2 quietly started

Right now, Santa’s sleigh is wobbling on final approach — but the runway lights are still on.

📌 Important caveat (before the Grinch lawyers call):
There is still time left on the clock for the Santa Claus Rally to fulfill its historical duty. One decisive push, one coordinated bid, one proper late-December squeeze — and this narrative flips faster than a gamma book on thin liquidity.

Cycle Day 3 Verdict (for now):
⚖️ Too early to declare the rally dead
🎄 Too late to pretend risk doesn’t matter

Santa hasn’t been grounded…
…but he’s definitely circling the airport with fuel gauges flashing.

****Key for Cycle Day 3  will be for price to reclaim the CD1 Low (6969) to secure a positive 3 Day Rally Statistic, which has a 92.40% historical track record.

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   ESH

Nasdaq (NQ)

Prior Session was Cycle Day 2: “The Mag Drag” 

Santa strapped in… but the Magnificent 7 clearly skipped weight-and-balance checks. 🎅📉
From the opening bell, heavy MAG positioning leaned decisively sell-side, turning what should’ve been festive lift into aerodynamic drag.

The sleigh never quite found altitude as big-tech ballast pressed price action lower throughout the session.
Amid the turbulence, Apple was the lone reindeer still flapping its wings — managing to cling to slightly positive gains while the rest of the MAG crew politely pretended not to notice.

Bottom line?
Cycle Day 2 delivered exactly what it often does late in the year:
👉 Rotation, distribution, and selective strength — not broad-based cheer.
Santa may still rally… but somebody needs to repack the sleigh before takeoff.

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…Transition from Cycle Day 2 to Cycle Day 3

Transition into Cycle Day 3: MAGS 7: “The Grinch at the Gates”

Enter The Grinch — green, grumpy, and lurking just below key structure with a sack labeled “Liquidity & Hope.”
His mission? Steal momentum before the Magnificent 7 can reclaim what matters most.

🎯 Primary Objective (Non-Negotiable):
Reclaim the Cycle Day 1 Low — 25,834.25
That level is the chimney. If price gets back up it cleanly, Christmas stays on the schedule. Miss it, and the Grinch starts humming.

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The Setup (What the Market Gave Us)

Cycle Day 2 did what CD2 does best: softened resolve. Rotation, hesitation, selective weakness.
Perfect conditions for the Grinch to whisper, “You don’t really want risk into year-end… do you?”

Cycle Day 3 is where that whisper either:

• Gets ignored and steamrolled

• Or turns into a full-blown mood swing

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Bull Case: “Kick the Grinch off the Roof”

• Early defense holds, bids firm

• 25,834.25 reclaimed and held

• MAGS leaders stop leaking and start lifting

• Shorts feel the cold draft and scramble for coats

📈 Translation:
The Grinch slips on icy shingles, drops the sack, and Santa gets his sleigh back. Momentum returns just enough to keep the seasonal stat alive.

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Bear Case: “The Grinch Steals Christmas”

• Reclaim attempt fails or stalls

• Sellers defend below 25,834.25

• Breadth stays selective, rallies feel heavy

• Late-day fade whispers, “Run the clock”

📉 Translation:
The Grinch grins, ties off the sack, and walks downhill with momentum. No collapse — just enough pressure to smother enthusiasm.

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Cycle Day 3 Trading Mentality

• 🎄 No chasing cheer

• 🧯 Respect failed reclaims

• ⏱️ Late-day behavior matters more than the open

• 💰 Capital preservation beats holiday heroics

Final Word:
This isn’t about saving Christmas.
It’s about defending structure.

Reclaim 25,834.25 and the Grinch loses leverage.
Fail it, and he keeps the remote… and the narrative.

Tomorrow decides whether the Grinch gets booted —
or gets comfy.

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NQH 

Economic Calendar

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –BR

*****This trade strategy report is disseminated for “education only” and should not be viewed in any way as a recommendation to buy or sell futures products.”

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IMPORTANT NOTICE! No representation is being made that the use of this strategy or any system or trading methodology will generate profits. Past performance is not necessarily indicative of future results. There is substantial risk of loss associated with trading securities and options on equities. Only risk capital should be used to trade. Trading securities is not suitable for everyone.

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