This week delivered a masterclass in market resilience. After President Trump rattled global markets with threats of EU tariffs over Greenland, followed by a swift reversal, investors demonstrated remarkable composure. The question now: Is this volatility the new normal, or a temporary blip in an otherwise robust bull market?

Corporate earnings continue to impress, with three quarters of reporting companies exceeding profit expectations. Yet beneath the surface, fascinating divergences emerge. Technology companies navigate supply constraints while consumer-facing sectors struggle. What does this tell us about the broader economic picture?

Meanwhile, commodities markets paint a dramatic picture. Natural gas just posted its largest two-day gain on record as arctic conditions grip the nation. Oil prices dance between geopolitical risk premiums and persistent oversupply. And gold, that ancient store of value, marches inexorably toward the historic $5,000 level.

This week's Federal Reserve meeting could prove pivotal. With markets pricing in a 95% probability of a pause, attention shifts to Chairman Powell's commentary on trade policy, inflation expectations, and the recent Justice Department investigation. Will the Fed maintain its wait-and-see approach, or signal a more definitive path forward?

The S&P 500 posted a modest decline of 0.37% last week, closing at 6,916, as markets navigated a volatile tug-of-war between geopolitical developments and strong corporate earnings. The week began with sharp selling pressure following President Trump's announcement of new tariffs on eight EU countries, demanding acquisition of Greenland before tariffs would be lifted. This drove the index to an intraday low of 6,789 on January 20th.

Technical indicators showed stress during this decline. The S&P 500 broke below 6,930 uptrend support and crossed beneath the 6,829 daily bottom Bollinger Band twice, while the daily RSI bounced off support near 40. However, this proved to be a healthy consolidation rather than a trend reversal. By week's end, President Trump softened his stance at the Davos economic forum, announcing a framework deal had been reached and tariffs would not be imposed.

The result was significant volatility that ultimately resolved into what appears to be a constructive pullback before resumption of the broader uptrend. The daily top Bollinger Band now trades at 6,999, suggesting limited technical resistance to a push above 7,000 for the first time in history. Consumer sentiment data released Friday showed improvement in January as near-term inflation expectations eased and geopolitical turmoil failed to dim confidence.

We believe the combination of strong corporate earnings, accommodative Federal Reserve policy despite recent hawkish rhetoric, and robust technology sector capital expenditure plans supports further upside in major indices. The technical setup remains constructive following this consolidation, with momentum indicators reset to healthier levels that typically precede renewed rallies.

Earnings season continues to exceed expectations across multiple metrics. We have now received results from 13% of S&P 500 companies, with 75% exceeding EPS expectations and 69% surpassing revenue forecasts. The blended earnings growth rate stands at 8.2%, slightly below initial expectations of 8.3%, but it remains far too early to judge the full season.

January guidance announcements have been remarkably positive. Out of 234 guidance announcements, 111 have been positive while just 37 have been negative. This represents a net positive ratio of 32%, the strongest start to earnings season since the post-COVID recovery and before that, only exceeded in January 2018 when companies adjusted numbers for tax cuts.

These are not numbers typically seen late in economic cycles. They represent early-cycle guidance patterns that historically correlate with sustained market strength. Upward trending guidance announcements tend to lead to upwardly revised earnings estimates, and increased earnings estimates correlate strongly with higher stock prices over subsequent quarters.

Looking ahead to Q1 2026, the guidance picture remains mixed. Six S&P 500 companies have issued negative EPS guidance while four have provided positive guidance. This suggests a more cautious outlook, though the overall tone remains constructive given strong current results and robust demand indicators across key sectors.

The artificial intelligence investment thesis faces a critical test this week as Microsoft and Meta report quarterly results. Both companies will provide updated capital expenditure guidance that serves as the primary indicator for where the AI trade is headed. Some market observers, including Michael Burry, believe stock prices will peak long before capital expenditure peaks, drawing parallels to the telecom buildout that preceded the 2000 technology bubble.

However, current evidence suggests we remain far from supply-side excess. Intel's CFO recently stated the company navigated market conditions constrained by supply for key products for five consecutive quarters. Samsung reportedly plans to double NAND prices due to tightening supply and surging demand, following a previous 70% increase in DRAM prices. These component shortages typically persist during capital expenditure surge phases and do not preclude eventual overcapacity.

TSMC's CEO provided perhaps the most telling commentary, stating the company lacks confidence it will have enough supply to meet demand through 2029. New fabrication facilities take two to three years to build, meaning current capital expenditure decisions target 2028-2029 supply needs. This timeline suggests the AI infrastructure buildout has substantial runway ahead.

Market expectations for hyperscaler capital expenditure remain elevated. Microsoft and Meta's guidance this week will be scrutinized for any signs of spending moderation. However, given persistent supply constraints and robust demand signals, we expect continued strength in AI infrastructure investment that supports semiconductor, networking, and data center equipment companies.

Consumer sentiment improved in January according to the University of Michigan survey, as near-term inflation expectations eased and geopolitical turmoil failed to significantly impact confidence levels. This resilience in consumer attitudes supports continued spending and economic growth expectations for the first quarter.

Macroeconomic indicators that correlate with earnings have continued pushing higher as we enter the busiest weeks of earnings season. This proprietary index suggests positive earnings surprises and favorable price action in the weeks ahead, barring unforeseen disruptions from trade policy or geopolitical developments.

The Federal Reserve's upcoming rate decision Wednesday carries particular significance. While markets price in a 95% probability of a pause, attention focuses on Chairman Powell's commentary regarding trade policy impacts, the recent Justice Department investigation, and the central bank's reaction to persistent labor market strength amid moderating inflation pressures.

The technical setup for the S&P 500 appears constructive following last week's healthy pullback. The index previously reached a fresh high near 6,920 on January 17th, accompanied by crosses above the daily top Bollinger Band and a daily RSI exceeding 70. The subsequent decline to 6,789 allowed technical indicators to reset, with the daily top Bollinger Band now at 6,999 and the RSI falling back to approximately 60.

We believe this represents a textbook technical correction that has created a favorable entry point for further upside. The rapid decline in overbought indicators, combined with maintenance of uptrend support levels, suggests buying interest remains strong at lower prices. With technology capital expenditure continuing at robust levels and the Federal Reserve maintaining its easing bias, we expect new record highs ahead.

The market appears ready to break above 7,000 for the first time in history. Momentum indicators have reset without breaking the longer-term uptrend structure. The recent low at 6,789, while breaking below the previous higher low at 6,824 from January 2nd, does not invalidate the broader bullish pattern in our assessment.

Therefore, we maintain a bullish stance on the S&P 500 with a 7,000 target and 6,700 stop-loss. This setup offers favorable risk-reward characteristics as markets digest strong earnings results and prepare for the Federal Reserve's policy announcement. Any near-term weakness should be viewed as opportunity to add exposure rather than signal to reduce positions.

The Federal Open Market Committee meets Wednesday with markets pricing in a 95% probability of maintaining current rates. This hawkish positioning reflects recent commentary from Chairman Powell and persistent inflation readings above the Fed's 2% target. However, we believe markets may be over-discounting inflation risks while under-discounting labor market cooling.

The combination of extreme bond positioning and cooling trade rhetoric could produce a buy-the-news outcome for fixed income markets at this week's meeting. We expect Chairman Powell to maintain the Fed's wait-and-see approach while addressing questions about the recent Justice Department investigation and potential political pressure on Fed independence.

Treasury yields have been volatile, spiking to five-month highs of 4.30% on tariff threats before settling back to 4.22%. The initial move higher reflected concerns about trade policy impacts on inflation and an indication that the Supreme Court was unlikely to allow President Trump to fire Fed Governor Lisa Cook immediately. However, as tariff rhetoric cooled, yields retraced much of that spike.

We believe the Fed will ultimately deliver additional rate cuts this year as labor market data continues to moderate and inflation pressures ease. The current hawkish market positioning creates opportunity in longer-duration Treasuries, particularly as uncertainty from trade policy and political pressures begins to resolve. Therefore, we remain bullish on bonds with continued expectation for yields to move lower.

Several high-profile companies report earnings this week with significant implications for market direction. Microsoft reports Wednesday evening, with markets expecting continued strength in cloud computing and artificial intelligence services. The company's capital expenditure guidance will be scrutinized as the primary indicator of AI infrastructure spending trajectory.

Meta Platforms also reports Wednesday, with investors focused on advertising revenue growth and reality labs spending. The company's AI infrastructure investments and plans for continued capital expenditure expansion will be key topics on the conference call. Both Microsoft and Meta serve as bellwethers for the broader AI investment theme that has driven technology sector outperformance.

Apple reports Thursday with expectations for strong iPhone demand driven by the iPhone 17 cycle. Consensus estimates call for units in the low 80 million range, though data checks suggest potential for 84-90 million units. Higher memory costs could pressure margins for the March quarter, but analysts believe the company's higher Pro mix and services strength will offset cost headwinds.

Sentiment toward Apple has remained positive despite the stock falling back to levels seen after last year's earnings. Over the past 20 years, when sentiment fell during the quarter by similar amounts while remaining bullish, the stock was higher three months later 84% of the time, for an average gain of 17.1%. This suggests a favorable setup heading into the report.

Other notable reports include Brinker International, where expectations for a beat-and-raise quarter could drive shares higher, and Deckers Brands, where sentiment remains bearish despite improving fundamentals. Data checks suggest Ugg demand picked up significantly during the quarter, potentially setting up for positive surprises

WTI crude closed the week 3.30% higher at $61.28 as markets navigated a volatile tug-of-war between geopolitical tensions and persistent oversupply. Prices surged toward $61.00 on Friday following President Trump's warning that a US armada is heading toward Iran. Warships including an aircraft carrier and guided-missile destroyers will arrive in the Middle East in coming days, though we have seen similar sequences before that failed to produce sustained rallies.

Earlier in the week, much of the geopolitical risk premium evaporated after President Trump softened his rhetoric, signaling preference for a framework deal rather than immediate military action, provided Tehran adheres to nuclear constraints. Attention shifted toward renewed trade tensions between the US and EU, which markets view as bearish for oil demand outlook.

The week began with sharp losses, falling into a low of $58.53 on January 20th before rebounding above $61.00 on January 23rd. The daily RSI broke below uptrend support and rebounded back into the uptrend on Friday near 60, which we believe is positioned for rejection. The daily bottom Bollinger Band has begun shifting lower again to $55.95, while the daily top Bollinger Band remains around current prices at $61.65.

We believe rallies in oil prices will continue to be sold, particularly as President Trump has explicitly stated his preference for oil prices below $53 per barrel. The fundamental backdrop remains challenged by rising supply, political pressure for lower prices, and mixed demand signals. As we near the top end of the recent trading range, we look for rejection of the $61.00 to $62.00 technical supply zone.

Supply-side dynamics continue weighing heavily on crude prices despite OPEC+ production management efforts. Reuters reported Saudi Arabia may reduce December crude prices for Asian buyers to multi-month lows due to ample supplies. This pricing action signals weakening demand from key Asian markets and intensifying competition among producers.

Russian oil exports to top buyers China and India continue despite US sanctions, with new information suggesting OPEC+ is leaning toward a modest output boost in December. The eight OPEC+ members implementing production increases have already added more than 2.7 million barrels per day, approximately 2.5% of global supply. This incremental supply enters a market already dealing with demand concerns.

Most significantly for the medium-term outlook, President Trump continues advocating for lower energy prices and $2.00 per gallon gasoline. This political priority creates an implicit ceiling on crude oil prices, as the administration appears willing to encourage production increases and may resist any meaningful rally in energy markets. This represents a structural headwind that could cap upside attempts for an extended period.

From a technical perspective, WTI crude shows a bearish configuration with Bollinger Bands converged significantly. Given the fundamental backdrop and rejection of resistance levels, we expect consolidation to resolve to the downside. The path appears clear for a sustained break below $60.00 this week, potentially opening the door to a move toward $58.00. Therefore, we maintain a bearish stance on crude with a $56.00 target and $63.00 stop-loss.

Gold prices for February delivery closed the week 8.35% higher at $4,983 per ounce, extending their record run toward the historic $5,000 level. Silver prices rose above $100 per ounce for the first time ever on Friday as investors piled into safe-haven assets amid geopolitical turmoil and renewed trade tensions. Silver has now surged more than 200% over the past year, driven by ongoing challenges in scaling up refining capacity and persistent supply shortages.

The rally in precious metals accelerated as President Trump's tariff threats created uncertainty before his subsequent reversal. However, underlying safe-haven demand remains robust across multiple dimensions. Central bank demand continues at historically elevated levels, geopolitical tensions persist globally, and real interest rates remain in negative territory despite recent nominal rate increases.

The US Dollar Index posted its worst week since April 2025, falling from 99.50 to 97.50 as markets reacted to trade policy uncertainty. The dollar now trades below its 97.68 daily bottom Bollinger Band with a daily RSI of approximately 34, appearing oversold but clearly in a strong downtrend. Even after posting its worst year since 2017, the dollar continues pushing lower, providing additional tailwind for dollar-denominated commodities.

Fundamentally, the bullish factors that have pushed gold sharply higher over the past 24 months remain stronger than ever. Safe-haven demand should remain robust as trade policy uncertainty persists and geopolitical tensions continue to simmer. The combination of accommodative monetary policy expectations, negative real yields, and ongoing currency debasement concerns supports further upside.

Gold is clearly in a historic uptrend and continues to largely disregard overbought technical conditions. We have seen four consecutive crosses above the daily top Bollinger Band, most recently at $4,933 on January 23rd, with the daily RSI officially back to 80+. The daily bottom Bollinger Band has begun shifting lower to $4,207, while prices have not seen a higher low formation since the $4,284 low on December 31st.

A natural spot for the next higher low would be around the top end of upward trending channel support at $4,750. However, we believe the market wants to see $5,000 before any meaningful consolidation occurs. This psychological level represents a historic milestone that will attract significant attention from both institutional and retail investors.

The technical picture is beginning to look severely overbought, but gold has demonstrated ability to remain overbought for extended periods during strong trending moves. Previous attempts to call tops based solely on technical overbought conditions have proven premature. The fundamental backdrop of safe-haven demand, currency debasement, and geopolitical uncertainty continues to support higher prices.

We are now neutral on gold and look to establish a new setup in the coming days. The approach to $5,000 will be critical in determining whether the market consolidates at this level or accelerates through it toward even higher targets. Price action over the next few sessions will provide important clues about positioning and the sustainability of this historic rally.

Apple represents a compelling opportunity heading into Thursday's earnings report. The company reports first quarter fiscal 2026 results after market close on January 29th, with consensus expectations for EPS of $2.65 on revenue of $137.4 billion. This falls within management's guidance range of $2.55 to $2.71 per share on revenue of $136.7 billion to $139.2 billion.

Data checks during the quarter tracked toward the high end or slightly above company guidance, with iPhone demand particularly strong driven by the iPhone 17 cycle. Consensus estimates call for low 80 million iPhone units, but strong demand suggests potential for 84-90 million units in the range. This would represent solid growth despite ongoing component cost pressures.

Multiple financial services firms have expressed confidence in the setup. Checks suggest strong iPhone sales during the quarter should lead to upside to estimates, though some analysts note potential for margin pressure in the March quarter guidance due to higher memory costs. However, the company's higher Pro mix and services strength are expected to offset these headwinds.

Sentiment analysis reveals a favorable positioning. Most Magnificent 7 stocks have seen sentiment drop significantly during the quarter, but Apple's sentiment has remained positive. Over the past 20 years, when sentiment fell during the quarter by similar amounts while remaining bullish, the stock was higher three months later 84% of the time, for an average gain of 17.1%.

Historical earnings patterns support the bullish case. When Apple provides in-line guidance while beating consensus estimates, the stock has opened higher 76% of the time with an average move of 2.6%. Even when the company gives negative guidance after beating estimates, the stock has still opened higher 63% of the time, as expectations are often appropriately lowered ahead of reports.

From a technical perspective, the stock has fallen from recent highs back to levels seen after last year's earnings report. This consolidation has reset technical indicators while maintaining the longer-term uptrend structure. The daily RSI has cooled from overbought territory, and the stock appears positioned for a positive reaction to strong results and reasonable guidance.

Given the combination of strong fundamental momentum, positive sentiment characteristics, favorable historical patterns, and constructive technical setup, we believe Apple represents an attractive trading opportunity ahead of Thursday’s release. The risk-reward profile appears favorable for those seeking exposure to a high-quality technology leader at reasonable valuations.

We maintain a net long position in the overall stock market, reflecting our constructive outlook for equities in the current environment. The combination of strong corporate earnings, accommodative Federal Reserve policy despite recent hawkish rhetoric, and robust technology sector capital expenditure plans supports further upside in major indices.

On Monday, January 26th, we initiated a long position in Apple ahead of Thursday's earnings report. This position reflects our conviction in the company's ability to deliver strong results and favorable guidance that should drive the stock higher. The setup combines positive sentiment characteristics with favorable historical patterns and strong fundamental momentum.

We have not made changes to other equity positions during the past week. The recent technical consolidation in large-cap technology stocks, including some volatility in holdings, appears healthy after the strong run from earlier in the quarter. We view any near-term weakness as opportunity to add to positions rather than signal to reduce exposure, provided fundamental thesis remains intact.

For the S&P 500, we maintain our bullish stance with a 7,000 target and 6,700 stop-loss. The recent pullback to 6,800 following tariff uncertainty created a favorable entry point, with key technical support levels holding and momentum indicators resetting to healthier levels. We continue viewing tariff-related headlines 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 $56.00 target and $63.00 stop-loss. The fundamental backdrop remains challenged by rising supply, political pressure for lower prices, and mixed demand signals. We recently closed our natural gas long position after the historic cold front drove prices well above our target, and are now bearish with a $4.80 target and $5.70 stop-loss as the February contract trades at significant premium to March and beyond.

We are currently neutral on gold after the metal's surge toward $5,000 per ounce. The approach to this psychological level will be critical in determining whether markets consolidate or accelerate higher. We look to establish a new setup based on price action over the coming sessions as the market tests this historic milestone.

For fixed income, we remain bullish on the iShares 20+ Year Treasury Bond ETF with a $93.00 target and $85.00 stop-loss. Despite the recent backup in yields following tariff threats, we expect the ten-year Treasury yield to fall back below 4.00% as markets price in continued rate cuts and this week's Fed meeting provides clarity on monetary policy trajectory.

Overall, our positioning reflects confidence in the continuation of the equity bull market, supported by strong corporate fundamentals, accommodative monetary policy, and constructive technical setup following recent consolidation. We remain focused on selective opportunities while maintaining tactical positions across asset classes to capture what we view as favorable risk-reward setups.

We want to hear from you. Hit reply and tell us:

What's your biggest investment challenge right now?

In what other ways can we help you?

Whether it's timing entries, managing risk, or identifying the next major opportunity—we read every response and use your feedback to make our research even more valuable.

Here's to your financial success,

Sincerely,

7AM Team

^{IMPORTANT DISCLAIMER}

^{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.}

^{The information provided is believed to be accurate but is not guaranteed. We do not warrant the completeness or timeliness of information presented. Investing involves risk including possible loss of principal. There is no assurance that any investment strategy will achieve its objectives.}