PickAlpha Evening Insights | 2026-01-05 - Three Trades For Tomorrow
• Stocks higher, rates and duration repriced after weak ISM and Venezuela news. • After hours: automakers reported 2025 sales gains; a small bank authorized a repurchase program. • Three Trade Ideas.
Market Wrap
Market Recap — Markets closed firmer as investors digested a weaker ISM manufacturing report and a major geopolitical shock; the S&P 500 finished at 6,902.05 while the Dow hit an all-time peak. ISM manufacturing fell to 47.9 in December, marking the tenth straight month below 50, with Prices Paid at 58.5 and employment contracting again, prompting repricing in rates and cyclicals. Energy led gains after Reuters reported a U.S. strike captured Venezuela’s president, boosting sector sentiment. Later headlines showed U.S. auto sales rose about 2.4% in 2025 to 16.2 million units, and Katahdin Bankshares announced a $2.0 million buyback authorization.
Intraday — At 10:00 ET the ISM manufacturing PMI came in at 47.9, below expectations and signaling faster contraction; the report’s elevated Prices Paid reading and continued employment weakness pushed markets to re-evaluate rate and growth dynamics through the session. By the close, energy strength and the geopolitical development supported broader equity gains, with the S&P 500 ending higher and the Dow at record levels.
After Hours — After the close, Reuters flagged that energy outperformed on the Venezuela capture story, while later releases showed automakers sold roughly 16.2 million vehicles in 2025 (up ~2.4%), with mixed OEM performance and shifts toward trucks, SUVs and hybrids; separately, Katahdin Bankshares unveiled a $2.0 million common stock repurchase program.
Three Trades For Tomorrow
1/3 Long $XLE — On Tue Jan 6, enter long XLE between 9:35 and 10:30 AM ET if it opens between -1.0% and +0.5% versus Mon close; place a stop 2.0% below entry and a take-profit 3.0% above entry, or exit any remaining position by Wed Jan 7 close.
Energy outperformed Monday after Reuters linked a 2.7% S&P 500 energy gain to a U.S. strike capturing Venezuela’s president, raising perceived supply and geopolitical risk. Such shocks often support crude and integrated majors over several sessions. Buying a modest opening dip in XLE targets continuation of this risk-premium bid.
Trade credibility: actionability 8.0 | timeliness 8.0 | clarity 8.0
2/3 Long $TLT — At 9:45 AM ET on Tue Jan 6, if the final US Services PMI for December prints at 51.5 or lower versus the 52.9 forecast, go long TLT on the 5-minute bar after the release; use a 1.0% stop below entry and a 2.0% profit target above…
The final December US Services PMI is forecast at 52.9 versus a prior 54.1, so a print at 51.5 or lower would be a clear downside surprise. Softer services activity typically reduces growth and inflation expectations, supporting lower Treasury yields. Expressing this via a conditional long in TLT targets a near-term duration bid after the release.
Trade credibility: actionability 8.0 | timeliness 8.0 | clarity 8.0
3/3 Long WTI Crude Oil Futures (NYMEX) ($CL=F) — At 4:30 PM ET on Tue Jan 6, if API reports a weekly US crude stock change of -4.0 million barrels or lower (a larger draw) versus the prior -1.45 million, go long CL=F on the 5-minute bar after the release; use…
API’s weekly crude stock change is a key early read on US oil inventories; the prior print showed a -1.45 million barrel draw. A significantly larger draw of -4.0 million barrels or more would tighten the perceived prompt crude balance. That typically supports WTI futures, making a conditional long in CL=F attractive into the next morning’s trade.
Trade credibility: actionability 8.0 | timeliness 8.0 | clarity 8.0