The weekly market indicator

Next week kicks off major earnings with JPMorgan, Wells Fargo, Citigroup, Bank of America, Morgan Stanley, BlackRock, Regions Financial, State Street, PNC Financial, M&T Bank, Delta Air Lines and TSMC all reporting, setting the tone for banks’ net interest income, credit quality and capex outlooks alongside travel demand and AI chip capacity trends. Banks face scrutiny on loan growth amid steady rates, while Delta’s consumer insights and TSMC’s foundry guidance will shape tech and cyclical sentiment into the season’s core. Information Technology edges higher but trails Materials, Energy and Industrials per the sector snapshot, underscoring a rotation toward reflation cyclicals over pure tech plays ahead of TSMC’s critical update on AI demand and pricing power. Strong TSMC results could pull semis and equipment names back into leadership, countering the current lag in XLK relative to broader market strength. Consumer Discretionary Sector ChallengesXLY posts solid weekly gains yet ranks behind top cyclicals, highlighting investor caution on consumer durability despite positive momentum, with Delta’s earnings poised to clarify travel spending and fare dynamics that ripple into retail and leisure names. Softer guidance there risks amplifying selective spending pressures already evident in the sector’s relative underperformance. The meeting between President Trump and Cantor CEO Howard Lutnick with homebuilders spotlights mortgage rates, supply incentives and builder credit, where policy tailwinds could lift homebuilder stocks even as Fed path keeps financials volatile. Signals on deregulation or financing relief offer upside for the group amid broader rate sensitivity. Speakers refine post-2025 neutral stance messaging, with Williams noting policy “well positioned” for 2026 after cuts, keeping markets alert to shifts on inflation progress versus growth risks. Data dependence dominates, with tone guiding cut repricing into bank earnings week. Williams, Bostic and others this week stress inflation drift to target alongside labor resilience, where hawkish inflation notes hit financials hardest but dovish growth worries support banks and cyclicals pre-earnings. Unity around no-rush easing bolsters soft landing odds without committing to near-term moves. December CPI and Core CPI land Tuesday at 8:30 a.m. ET, probing shelter, services and goods disinflation post-year-end noise, with forecasts eyeing sub-3% headline and cooling core to affirm Fed patience. Upside risks in sticky components challenge cut bets, favoring defensives if confirmed. November CPI sat near 324 with energy up 4.2%, food 2.6% and shelter 3% YoY, where core ex-housing slowdown and goods relief prove pivotal for neutral-rate comfort later in 2026. Shelter persistence tempers aggressive easing hopes despite overall progress. Tensions linger in energy corridors and chip routes, though markets shrug shocks as contained versus systemic, leaving outperforming Energy and Materials exposed to flare-ups that reverse cyclical bids. Escalation threats amplify commodity swings into data week. Cyclicals dominate via Materials, Energy, Industrials and Discretionary leading daily/weekly per the table, while Health Care, Financials and Staples gain modestly and Communication Services/Utilities lag, signaling growth rotation over defense. Narrow breadth favors mega-caps amid ETF flows. Materials and Energy surge on commodities and infra themes, Industrials ride aero/grid demand, Financials position for NII visibility despite lags—setting up rotation plays into CPI and banks. Financials (XLF) trail S&P one-year at 15-17% versus 16-18%, lately softening on cut reassessment, with KBE/NDAQ echoing bank/exchange worries over fees and curves. Bitcoin consolidates( 90,425) post-rally on adoption bets, Ethereum ( 3,087) lags relatively; both hinge on CPI/Fed for yield-sensitive flows. Best sector performance: Industrials/tech-comms lead via GE/Meta themes, outpacing rate-tied laggards with structural edges. Opportunities and dip buys: Dip buys favor balance-sheet fortresses in infra/aero amid uncertainty; 689/686 frames longs above, shorts below. Key Chart Patterns: 689 hold preserves highs bias per recording; MFI/+DI/ADX/DMA align bullish while intact, with 686 breakdown flipping trend-followers short. via /r/Badboyardie https://ift.tt/HYoCpFt