Welcome to this week's market intelligence report, where we're witnessing a potential inflection point that could define the next phase of this bull market.

After years of weakness, U.S. manufacturing appears to be turning the corner. The January ISM numbers confirmed what early earnings season data had been suggesting: the longest manufacturing recession in post-WWII history may finally be ending. But here's the question on every investor's mind: is this the signal for a new bull market phase, or simply a brief respite before renewed weakness?

Meanwhile, the S&P 500 briefly touched our 7,000 target before pulling back, creating what appears to be a textbook consolidation pattern. The technical setup looks constructive, but some underlying signals are giving us pause. Market breadth has been trending higher since early December while prices have flattened, and now breadth is starting to tick lower. We haven't seen new money come into the market despite new highs.

In this week's report, we'll dive deep into what the ISM data is telling us about future production and stock prices. We'll examine why the transportation sector breakout could be signaling broader economic strength. We'll also explore why Amazon's current stock price might represent better value than it did a year ago, despite trading at the same level. And we'll share our thoughts on why the gold and precious metals volatility we witnessed last week may not be the end of the story.

Let's get into it.

The S&P 500 closed the week 0.33% higher, at 6,939, in a highly eventful week on all fronts as President Trump named his new Fed Chair, earnings season was in full swing, and precious metal volatility hit 1980 levels. This marks the index's first break above 7,000, briefly touching 7,002 on January 28th before pulling back.

The technical picture showed some interesting developments. The S&P 500 opened the week with a brief cross above our 7,000 target, but this came with a rejection of approximately 60 trendline resistance in the daily RSI and a rejection of trendline resistance in price. From there, the index fell to a low of 6,870 on January 29th, which we believe represents the most recent higher low following 6,789 on January 20th.

The underlying technicals, however, appear somewhat vulnerable. Breadth has been trending higher since early December while stock prices have more flatlined than trended. Last week, breadth started to tick lower. Meanwhile, even though the S&P 500 made new highs last week and we have a slightly upward slope along the top of prices since the October peak, we have not seen new money come into the market. This isn't a sell signal, but it does warn of downside risks.

With 33% of S&P 500 earnings now reported, the results have been impressive. 75% of those companies exceeded EPS expectations and 65% exceeded revenue expectations. The blended earnings growth rate is 11.9%, now well above the initial expectation of 8.3% as large-cap technology stocks reported earnings. For Q1 2026, 7 S&P 500 companies have issued negative EPS guidance compared to 17 companies that have issued positive EPS guidance.

Price reactions to large-cap technology stocks' earnings have been fairly mixed. Apple swung between gains and losses despite beating fiscal first-quarter expectations and reporting a significant surge in iPhone sales. That followed Microsoft's 10% post-earnings drop on Thursday, marking its worst day since 2020 and wiping out more than $350 billion in market cap. Meta rose nearly 10% after reporting earnings.

Sector performance continues to show notable divergence. Staples and Health Care continue to outperform as investors became more defensive last week. Technology has been weak despite strong increases in earnings estimates. Sectors showing relative strength include Gold Miners, Oil Services, Agriculture, Materials, and Biotech. Meanwhile, Cybersecurity, AI, Software, FinTech, and Utilities are showing relative weakness.

A significant development this week was the January ISM Manufacturing numbers, which pointed to an expansion. This isn't the first reading above 50 since November 2022, but it is the highest reading in more than 3 years. From November 2022 through December 2025, the PMI was below 50 for 35 out of 38 months. That was the weakest stretch in the entire post-WWII dataset, where the typical recession had fewer than 12 months of sub-50 PMI numbers.

More importantly, the PMI for New Orders less Inventories showed an increase of 7 points from December, reaching its highest levels since September 2021. When orders exceed inventories, it indicates future production. Since 1988, whenever New Orders less Inventories increased by seven points or more, the overall ISM number in the subsequent month increased by an average of 1.8 points. This suggests ISM Manufacturing will continue to expand in February.

The ISM data also has positive indications for actual production numbers. When ISM New Orders less Inventories have increased by seven or more points, Industrial Production numbers for that same month increased by 0.39% on a sequential basis, and production accelerated over the next month with an average increase of 0.42%. There is a correlation between production and the S&P 500, so this morning's ISM numbers support higher stock prices in February.

Something changed in December that was revealed with a breakout in the Transports. The U.S. Transportation ETF (IYT) has been showing strength, suggesting that the long freight recession may finally be coming to an end. Conference calls during earnings season had countless comments suggesting the freight recession was surely ending because it had never lasted this long before, and multiple research reports pointed to a potential uptick in trucking correlated with ISM Manufacturing data.

J.B. Hunt confirmed this thesis when they reported earnings, noting that the strength they saw during the fourth quarter had carried over into the beginning of January. Several transportation companies report earnings this week, including Allegiant Travel (ALGT), Old Dominion Freight Line (ODFL), U-Haul (UHAL), Werner Enterprises (WERN), Hub Group (HUBG), XPO Logistics (XPO), and RXO (RXO). While they are unlikely to all react favorably to earnings, current industry conditions favor the stocks.

On the ISM news, Saia shares put in a large green candle, pushing the stock above the $350 level. This was resistance after earnings in July and where the stock gapped from on earnings back in April. As long as the stock holds $350, the assumption is more upside with the potential to return to around $450 where it sold off from back in February.

On Friday, President Trump announced that Kevin Warsh would be the next Fed Chair, replacing Jerome Powell. Warsh's selection seemed to somewhat ease concern around Fed independence because of his experience as a Fed governor and strong stance at times against inflation. While he is likely to push for lower rates in the short term as President Trump wants, financial markets view him as someone who would maintain some sense of independence as well as maintain credibility for monetary policy.

By the time the decision was announced, it had already been priced in, and yields rallied as Kevin Warsh was expected to maintain a higher degree of Fed independence than others. However, it is also clear that immediate rate cuts are effectively a requirement for Kevin Warsh's nomination. Currently, markets see an 85% chance that rates are left unchanged in March and the next rate cut is not expected until the June 17th meeting, after Fed Chair Powell is out.

On Friday, new data showed that December PPI inflation came in hotter than expected at 3.0%, above expectations of 2.7%. Core PPI inflation rose to 3.3%, above expectations of 2.9%, reaching its highest level since July 2025. Fundamentally speaking, market expectations actually shifted even more hawkish last week, and we believe a dovish surprise is increasingly likely.

Looking ahead, we expect dip buyers to send the S&P 500 back above 7,000 and open for 7,100+. The daily RSI held approximately 50 support on both January 29th and 30th, and a higher high formed last week, both of which support an extension of the uptrend. We believe a higher low has formed at 6,870 on January 29th, following 6,789 on January 20th.

The fact that the S&P 500 closed higher last week is a testament to how strong momentum truly is, and we remain bullish of the fundamental backdrop. The ISM Manufacturing data supports higher stock prices in February given the correlation between industrial production and equity markets.

For now, our bias remains to the upside ahead of earnings, but just as the market was hitting new highs last week, some sentiment indicators dropped into warning territory. This is not necessarily a market direction signal, but we've seen previous occasions over the past several years when similar indicator patterns marked the start of a downturn. We are going to lean modestly toward shorting stocks after earnings announcements.

We believe the S&P 500 is positioned for a move back above 7,000 and a target of 7,150 with a stop-loss at 6,800.

Several high-profile companies are scheduled to report earnings this week. Amazon reports Thursday, February 5th, with expectations for earnings and revenue to be above consensus estimates, driven by a pickup in AWS growth. The company is also expected to see improving margins due to advertising strength, automation, lower fuel costs, and layoffs. Solid fourth-quarter results are expected to carry over into 2026.

Alphabet reports Wednesday, February 4th. Expectations are for a beat driven by Search reacceleration tied to AI usage and Gemini 3.0 engagement. However, earnings are somewhat of a wild card because the company tends to have periods of increased spending and hiring that often drive earnings misses. The company is ramping up CapEx and is expected to raise its 2026 CapEx guidance to around $140 billion.

Monolithic Power Systems (MPWR) reports Thursday, February 5th, with expectations for a beat and raise. The stock has already moved up 17% since TSMC's earnings release given its correlation with positive TSMC results. The stock has moved above its October highs of approximately $1,100, and as long as that holds, the assumption is more upside with a technical target above $1,300.

Flowserve (FLS) reports after the close on Thursday, February 5th. Notably, this is 10 days before its earliest historical date, as the company has reported earnings in the second or third week of February since the Financial Crisis. Companies tend to delay delivering bad news but are quick to share good news, so this early reporting date suggests the company has had no issues preparing year-end financials.

Flex (FLEX) reports Wednesday, February 4th before the open. The company's shares have been consolidating over the past quarter. However, the company has reported earnings in January each year for at least 25 years, and this will be the first time reporting in February. This late date warns that something may be wrong with the report and creates downside risks following earnings.

Several important economic releases are scheduled this week. On Monday February 2nd, we'll receive the January ISM Manufacturing data. Wednesday February 4th brings January ADP Employment and January ISM Services. Thursday February 5th features Initial Jobless Claims. Friday February 6th is loaded with January Employment data and February University of Michigan Consumer Sentiment.

On the employment front, proprietary data suggests hiring has softened. Similar historical declines in employment indices were followed by an increase in new jobs of just over 4,000, which suggests downside risks to the consensus estimate. Estimates indicate new jobs will increase from 50,000 in December to 85,000 in January, but the data suggests caution. We believe 50,000+ new jobs would be viewed as a positive for the stock market, though it still suggests we are close to an economic peak.

WTI crude (March 2026) closed the week 7.26% higher at $65.73, trading near six-month highs as tensions between the US and Iran persisted. On Thursday, oil prices hit their highest since early August after multiple sources said President Trump was weighing actions against Iran that included targeted strikes, raising concerns about supply disruptions.

On Friday, President Trump said, "we have a large armada, flotilla, heading toward Iran right now, even larger than what we had in Venezuela." However, President Trump continued to state that Iran "wants a deal" and expressed that there is a willingness to negotiate on the US side.

Rising geopolitical tensions are certainly a headwind for oil markets that justify a risk premium. However, we believe that any US action in Iran will be swift and temporary. President Trump has a clear aversion to prolonged wars and conflicts, and we believe a potential US strike on Iran would ultimately be sold after a brief surge in oil prices.

Additionally, one of President Trump's top economic priorities remains lower energy prices and $2.00 per gallon gas prices, which should continue to limit upside in WTI crude.

On the technical front, oil prices surged sharply into overbought territory last week, rising for four straight daily sessions. On January 27th, the top end of the long-term range in prices was broken at $61.50, which led above $63.00 promptly. This ultimately led to a high of $66.48 on January 29th with four straight crosses above the daily top Bollinger Band which now trades at $65.25, well below Friday's closing price.

The daily RSI also broke above 70 for the first time since June 2025 and the daily bottom Bollinger Band began shifting sharply lower to $55.33, all of which support our view that the technical picture has reached overbought territory. This week, we look for a reversal below $65.00 to open for a push back toward long-term support at $60.00.

We are bearish on WTI crude with a $60.00 target and $70.00 stop-loss.

Natural gas prices (March 2026) ended the week 20.97% higher at $4.42, as weather reports calling for cold risks into mid-February underpinned the market, which then attracted fresh speculative buying into the weekend. The EIA reported a 242 Bcf withdrawal from natural gas inventories for the week ended January 23rd, which came in heavier than expected.

Currently, market expectations are just about as bullish as they can get with the recent cold front well priced in to the commodity. We believe this is setting up for a sharp pullback in prices, particularly if forecasts do not live up to the "hype." Natural gas now trades above the $4.20 top end of its upward trending channel and in the $4.40 to $4.60 resistance range which sees ample technical supply.

We are bearish on natural gas with a $3.70 target and $4.55 stop-loss.

Gold prices (April 2026) closed the week 2.85% lower at $4,908 per ounce in one of the most eventful weeks for gold and precious metals markets ever. Gold and silver saw one of their most volatile weeks in history, swinging over $10 trillion of combined market cap on Friday alone, which led to sudden liquidity constraints in broader commodity and equity markets at times.

The week began with a break above our long-term $5,000 target as strong upward momentum carried over but remained somewhat orderly. On Wednesday, the rally accelerated into what we could categorize as a "euphoric state" after President Trump was asked about the recent sharp decline in the US Dollar (DXY) to which he responded that the US Dollar is "doing great."

Immediately, DXY fell sharply into a four-year low of 95.55 as US Dollar assets traded sharply higher on the news, leading gold futures above $5,600 for the first time in history. By the end of the week, DXY rebounded back above 97.00, gold erased its entire gain, and gold markets saw a $6.5 trillion drop in market cap in a matter of hours.

We believe the pullback was justified, but it is not the end of gold's rally. President Trump's comments on the US Dollar only further confirm our view: a weaker US Dollar is actually welcomed by the current administration. A weaker US Dollar allows for easier financial policy, lower trade deficits, and higher economic activity, which is why Trump said the currency is doing "great."

On the technical front, gold's daily RSI had risen to a multi-decade high of 90+ last week as prices hit a record high of $5,627 on January 29th, which also came with a sharp cross above the daily top Bollinger Band at $5,368. The resulting reversal came with a near $1,000 per ounce daily candlestick, a drop into approximately 55 in the daily RSI, and a bounce directly off of long-term upward trending channel support at $4,700.

In fact, this formed the most recent higher low after $4,284 from December 31st. We believe the fundamental picture has only improved and more weakness in DXY is ahead of us. The technical picture was more orderly than one would expect, with a higher high formation at $5,627 and a higher low at $4,700 uptrend support.

We believe a move back above $5,000 is coming early this week. We are bullish on gold with a $5,500 target and $4,700 stop-loss.

Earnings Date: Thursday, February 5, 2026 (4:00 PM ET)

Consensus EPS: $1.98

Expected EPS: $2.12

Revenue Estimate: $211.45 Billion

This time last year, shares of Amazon were trading around $240 ahead of earnings. The company beat expectations but provided first-quarter revenue guidance below estimates. The stock sold off on the news and, with the help of the overall market, continued lower into April. Since then, the company has continued to beat expectations while also providing in-line or better guidance each quarter.

Now that the stock is trading at the same level as last year, earnings estimates have been revised higher and are above where they were in January 2025. If earnings continue to get revised higher, then $240 should hold as support. That would push estimates to new highs, making the stock cheaper at $240 this year than it was last year, and supporting a move higher beyond $240.

Expectations are for earnings and revenue to be above consensus estimates, driven by a pickup in AWS growth. The company is also expected to see improving margins due to advertising strength, automation, lower fuel costs, and layoffs. Furthermore, while expectations are more neutral regarding the company's guidance, solid fourth-quarter results are expected to carry over into 2026.

Industry checks suggest a modest upside to estimates for the quarter, and Amazon is expected to provide first-quarter guidance that brackets consensus estimates. The company's fourth-quarter results and 2026 outlook are expected to lead to upward revisions to earnings estimates for the year.

The $2.12 expected EPS is the likely number to beat. We believe Amazon is positioned for continued momentum if the company beats and provides solid guidance. The stock is currently trading at an attractive valuation relative to last year given the higher earnings estimates, which provides a favorable risk-reward setup heading into earnings.

Entry Level: Current price around $240 represents support

Target: Move beyond $240 on continued earnings revisions

Earnings Date: Wednesday, February 4, 2026 (4:00 PM ET)

Consensus EPS: $2.58

Expected EPS: $2.73

Alphabet's earnings are always somewhat of a wild card because the company tends to have periods of increased spending and hiring that often drive earnings misses. Analysts don't have an easy way to track these fluctuations. In the current environment, the company is ramping up CapEx and is expected to raise its 2026 CapEx guidance to around $140 billion. This makes the stock particularly vulnerable on the spending side.

Over the past eight months, sentiment on Alphabet has shifted significantly. Back in May, sentiment was quite bearish, which historically preceded strong gains. At that time, when sentiment was at those stretched bearish levels, the stock was higher three months later by an average of 17.0% and was up 97% of the time. Now, the stock has more than doubled from those levels, and sentiment has improved considerably, creating a different risk profile.

Expectations are for a beat driven by Search reacceleration tied to AI usage and Gemini 3.0 engagement. The company has been successfully integrating AI capabilities into its core Search product, which is driving increased user engagement and monetization opportunities.

We expect Alphabet to beat earnings and revenue estimates for the quarter based on the strength in Search and continued momentum in Cloud services. The combination of AI-driven improvements in Search and growing enterprise adoption of Google Cloud creates multiple avenues for upside surprise.

The current sentiment environment creates some headwinds. With investors now more bullish on the stock compared to earlier in 2025, there are more people positioned for upside than downside. This shift in positioning means the stock could be vulnerable to any disappointment on spending or guidance.

That said, if the company beats expectations, we believe the stock has room to move higher. An earnings beat has typically resulted in positive price action, and the fundamental drivers remain intact with AI-enhanced Search and Cloud growth.

Entry Level: Current levels around $300

Key Risk: Higher than expected CapEx guidance or spending could pressure the stock

Catalyst: Beat on Search reacceleration and Cloud growth with in-line or better guidance

Our current portfolio maintains a net long position in the overall stock market, reflecting our constructive outlook for equities in the current environment. We believe the combination of strong corporate earnings, the improving manufacturing outlook, and supportive technical setups supports further upside in major indices.

We currently hold long positions in Amazon (AMZN) and Monolithic Power Systems (MPWR). The Amazon position reflects our view that the stock is attractively valued at current levels relative to last year given higher earnings estimates, with potential for further upside on a beat-and-raise quarter. The Monolithic Power Systems position benefits from positive TSMC results and the broader semiconductor strength, with technical targets above $1,300.

The thesis for our technology holdings has been reinforced by the positive ISM Manufacturing data and the improving economic outlook. The correlation between industrial production and stock prices supports our bullish stance on equities heading into February. The transportation sector breakout and improving freight conditions suggest broader economic strength that should benefit our positions.

We have not made any changes to these positions during the past week. The recent volatility in precious metals and large-cap technology stocks appears to be creating opportunities rather than signaling fundamental weakness. We view any near-term pullbacks as potential buying opportunities rather than signals to reduce exposure, provided that the fundamental thesis remains intact.

For the S&P 500, we are maintaining our bullish stance with a target of 7,150 and a stop-loss at 6,800. The recent pullback from 7,000 created a favorable entry point, with key technical support levels holding and momentum indicators suggesting the uptrend remains intact. We continue to view headline-driven volatility as noise and temporary buying opportunities rather than fundamental threats to the equity bull market.

In commodities, we are bearish on WTI crude oil with a $60.00 target and $70.00 stop-loss, and bearish on natural gas with a $3.70 target and $4.55 stop-loss. The fundamental backdrop for energy suggests the recent rallies are overdone despite geopolitical tensions. Conversely, we maintain our bullish stance on gold with a $5,500 target and $4,700 stop-loss, viewing the recent pullback as a healthy reset that improves the sustainability of the precious metals uptrend.

For fixed income, we are bullish on the iShares 20+ Year Treasury Bond ETF (TLT) with a $93.00 target and $85.00 stop-loss. TLT is now back at the bottom end of its recent range near $87.00 and will likely set up for another attempted break above $88.50 resistance in the coming days. We believe a dovish surprise is increasingly likely given how hawkish market expectations have become.

Overall, our positioning reflects confidence in the continuation of the equity bull market, supported by improving manufacturing data, strong corporate fundamentals, and a constructive technical setup following recent consolidation. We remain focused on quality names with solid earnings momentum while maintaining tactical positions in other asset classes to capture favorable risk-reward opportunities.

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^{This report represents analysis and opinion rather than investment advice or recommendations. All views expressed reflect our current thinking and may change as new information becomes available. Past performance does not guarantee future results.}

^{Readers should conduct their own research and consult with qualified financial advisors before making investment decisions. Market conditions can change rapidly, and positions discussed may not be suitable for all investors depending on individual circumstances, risk tolerance, and investment objectives.}

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