To The Moon

On January 21, 2026, $S&P 500(.SPX)$ logged one of its largest single-day gains since last November. Trump quickly reversed the market’s early-year slump after announcing at the Davos forum a delay of the tariffs on Europe originally scheduled for February 1, and claiming that a “framework agreement” had been reached on Greenland. Markets interpreted this pivot as a classic “TACO” (Trump Always Chickens Out) moment—where extreme pressure triggers sharp volatility, followed by a White House retreat or compromise. Historically,“TACO trades” have often been followed by strong upside. Looking back to the April 2025 “Liberation Day” tariff, the S&P 500 suffered only a brief pullback before policy delays sparked a nearly 40% rally spanning into the following year. The current foundation remains solid: across 36 major geopolitical events since 1940, U.S. equities rose in the subsequent three months 60% of the time. More importantly, the recent turbulence has proven to be an excellent buy-the-dip opportunity, as it was driven not by recession risk, but by policy flexibility creating a temporary sentiment premium. Earnings Season in Full Swing: Can It Further Support Valuations? Q4 corporate results have provided a firm floor for the broader market. Analysts of Factset expect double-digit profit growth across all quarters of 2026. Over the past ten years, actual earnings reported by S&P 500 companies have exceeded estimated earnings by 7.0% on average. During this same period, 76% of companies in the S&P 500 have reported actual EPS above the mean EPS estimate on average. The latest data from Bank of America (BofA) and JPMorgan suggest that this robust earnings cycle is offsetting tariff-related valuation concerns. Technical signals further reinforce the sustainability of the uptrend. Last week, roughly 70% of S&P 500 constituents were trading above their 200-day moving averages, while both the Russell 2000 and the equal-weight S&P 500 hit new all-time highs, indicating broad market breadth. Discussion Does the TACO pattern remain the most reliable signal for adding exposure in U.S. equities? Now that the S&P 500 has erased its 2026 losses, do you think we could see double-digit percentage gains over the next three months? With earnings growth staying strong, would you stick with the S&P 500, or rotate into the higher-beta Russell 2000 small caps? Share your trading plan in the comments and earn Tiger Coins! 🐯