Let’s dive into a quick recap of last week’s market movements and look ahead at what to expect in the coming week.

Last Week’s Recap: The stock indices experienced a notable sell-off at the beginning of the week breaking a 9 week winning streak. Specifically, the S&P 500 futures (ES) started the year losing (1.5%), closing at 4,735.24 on January 5th​​​​. The Nasdaq 100 declined more severely (3.2%) capping a downtrend all week to end at 16,462​​​​. The 10 year treasury closed slightly above 4%. These movements underscore the market’s current volatility expansion and the potential for new levels to be tested to the downside.

Key Levels to Watch: For the upcoming week, I’ll be keeping a close eye on the S&P 500 (ES) at the 4565 level and the Nasdaq 100 (NQ) around 15890, as indicated by the 4-hour chart using volume profile. Remember, while higher time frame analysis is crucial, it should not create a bias in our short-term day trading strategies.

Big Banks Kickoff Earnings Season: This week marks the beginning of earnings season, with major banks like JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, and BNY Mellon scheduled to report on Friday. Last quarter, each of these banks delivered better-than-expected results, largely buoyed by high interest rates. Their performance could set the tone for market sentiment in the days ahead.

Upcoming Week’s Events: The economic calendar seems relatively light, with the Core CPI report on Thursday at 7:30 am Central being the highlight. This data could provide insights into inflation trends and potentially influence market sentiment.

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