Seasonal Context & Events

The second week of earnings season keeps the spotlight firmly on Financials and Big Banks—still under the microscope for now. As for what’s next? Weeks 3 and 4 will bring Industrials, Technology, and Consumer Staples into focus, so expect the narrative to shift soon. This week will be a little shorter, with the Market taking Monday off for Martin Luther King, Jr. Day. Oh, and no options expirations this week, so at least that’s one less thing to overthink.

Key events include:

23rd January 13:30UTC Initial Jobless Claims

Those events may or may not influence the opening direction and subsequent days.

Thermometer

Breadth

Date	Ratio
13/01/2025	0.74
14/01/2025	0.75
15/01/2025	0.73
16/01/2025	0.74
17/01/2025	0.67

Sticky in the green, everything above 0.60 for me is a bullish reading.

Put/Call Ratio

OI	VO
2.45	1.01
1.85	0.97

Somebody looks like hedging against a correction. That’s the only red flag I’ve in the readings so far. But VO readings is supporting of a temporary position.

Coherence

SP500	+3.71%
RUT	+4.55%
DJT	+3.63%

Coherent to the up, enthusiast.

Support & Resistance Levels

R3	6145
R2	6138
R1	6113
Close	5996
S1	5858
S2	5808
S3	5793

Wrap Up & Forecast

A solid start to earnings season, paired with supportive macroeconomic data, gave the Market a nice boost on Wednesday. Coincidence? Maybe, but let’s not forget that I’ve already declared my disdain for Wednesdays—it’s not personal, it’s just how it is. Last week, I mentioned, “If all those analysts predicting how the season will unfold were always right, do you think we’d even have ‘reactions’ anymore?” Wednesday’s gap was a perfect reminder of two things: If you don’t know, you can always work and learn to know. But if you can’t know, relax—it’s out of your hands.

So, what went down last week? Monday opened lower touching previous S1 (yes, that gap from November 6th, 2024, finally closed on Monday, so I’ll stop obsessing over it… or maybe not). Gaps always leave breadcrumbs about where support and resistance have been—and might be again—so make a note, whether in your journal or on your charting software. After the gap closed, the Market shot straight up opening on Wednesday right at R1. Were you quick enough to jump in? Or did hesitation hold you back?

The rally continued through Thursday but started losing steam as the trend ran out of momentum quite close to R2. Then came Friday, with a gap-up opening that might have reignited some optimism in the air but already feeling R3.

So, what’s next? As always, the options remain the same: up, down, or sideways.

Down? Well, that depends on what you mean by “down.” For me, a downtrend means an actual decline that lasts for days—none of this slow-motion sideways grind losing 0.1% per day. That’s not “down”; that’s the Market taking a nap. Do I see down as a possibility? Of course, it’s always an option. But given it’s earnings season, post-options expiration, with no major events or “catastrophic headlines” on the horizon, I wouldn’t expect a meaningful or tradable move to the downside.

Sideways? That’s definitely on the table. Picture the Market burping, digesting last week’s moves, and flirting with the psychological resistance level of 6000$, where plenty of retail traders likely have profit-taking or strike prices lined up. With Monday off for the Market, and a shorter week ahead, sideways seems like a safe bet.

Up? Absolutely possible. Up to where? Don’t be surprised if the Market aims to revisit the early December 2024 highs. That said, unless something remarkably good happens, I’d expect this to play out closer to the end of the month rather than this week.

Overall, next week doesn’t seem like it’ll bring much action. I could be wrong, but the more likely scenario is waiting until the end of the week—or even next week—for a shot at resuming the uptrend. I don’t mind being wrong, so here’s a thought: the Market managed to close above that downsloping trendline from mid-December 2024, but with a small-bodied candle. Mix that with the possibility of a Tuesday dip quite close to that blue dotted trendline or in that area anyway—post-holiday hangover included—and it starts to make sense. As mentioned earlier, we might see a touch of weakness before the uptrend resumes, likely by the end of the week or into the next one.

Previously, in the post from January 10th, 2025, I mentioned February 18th-19th as a possible pause for the Market’s rise. I’d like to adjust that slightly to around February 12th for now. From there, some sideways action between February 12th and 18th-19th seems likely.

As for targets during this rally? Somewhere in the 6250$-6300$ range by mid-February sounds reasonable. Let’s see if the Market agrees.