Stock Market Outlook entering the Week of January 26th= Uptrend
- ADX Directional Indicators: Uptrend
- Institutional Activity (Price & Volume): Uptrend
- On Balance Volume Indicator: Uptrend
ANALYSIS
The stock market outlook remains in an uptrend.
The S&P500 ( $SPX ) gained 1.7% last week. The index is 2% above the 50-day moving average and ~9% above the 200-day moving average.
SPX Price & Volume Chart for Jan 26 2025
The ADX flipped to bullish last Monday. Institutional activity looks okay; selling has subsided over the past two weeks.
S&P Sector Performance for Week 04 of 2025
Communications ( $XLC ) and Technology ( $XLK ) sectors outperformed, while Energy stocks lagged ( $XLE ) with a down week for oil.
Following the improvements last week, a few more sectors moved back to bullish bias: Healthcare, Industrials, and Technology. Materials tests a potential change at neutral. In the shorter-term, Communications, Consumer Staples, Financials, and Healthcare are overbought and Energy is oversold.
Sector Style Performance for Week 04 of 2025
The Momentum style factor was the top performer again, with a gain of 4%. The “worst” performer was High Dividend at +0.3%. A few style factors also showed an improvement in bias: Small Cap Growth, Quality, and Defensive moved to Bullish, Large Cap Value improved to Neutral. That said, Large and Mega Cap Growth, Large Cap Value, Momentum, and Quality are now overbought.
Asset Class Performance for Week 04 2025
Bitcoin ( $IBIT ) was the best performer again last week, while Oil took a breather. In the near term, Gold and Equities are overbought; oil and the dollar are oversold. No changes in bias.
COMMENTARY
Most of the equity market recovered from the recent round of selling, although a few sectors continue to struggle (i.e. Consumer Staples and Real Estate). The dollar began a correction last week last week, which impacted commodities to the downside and equities to the upside.
A flurry of executive orders didn’t put a damper on U.S. equities last week, as major tariffs remain under wraps for the time being. The next deadline is Feb 1 for a 25% tariff on Mexico and Canada Most federal agencies are evaluating U.S. trade policy and will provide recommendations, including potential tariffs, by April 1.
Then, at the World Economy Forum, President Trump said he would “demand that interest rates drop immediately”, implying that he’ll pressure the Fed for further cuts. Expect this to be a topic of discussion at the next FOMC meeting…which happens to be this Wednesday.
Following the FOMC, the first Q4 GDP estimate is released Thursday, followed by the latest PCE reading on Friday.
Earnings season really picks up this week, with reports from 20% and 15% of the S&P500 and Nasdaq, respectively.
Best to Your Week!
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