Weekly Market Outlook: Critical Weeks Ahead

It’s the last week of January and the stock market is up nearly four and a half percent to start the year. Sentiment hasn’t changed much with even more investors flipping to neutral over the last week. Options traders have pushed the put/call ratio lower and the fear and greed index is now in extreme greed territory. I don’t put too much emphasis on this index as it can remain in extremes for longer than you think. However, in general it can help gauge where we are at along with other indicators.

We also have a number of economic data points coming out this week along with the first fed meeting of the year on the 31st. The overall expectation is that the fed will cut interest rates and inflation will continue to come off so we will need to be weary of following the crowd here. Any indication that the fed will change course or that inflation remains sticky could spook the market. Going back to our yearly outlook I also highlighted the potential for our first major high of the year to come in February so the next few weeks we will be watching for signals in the market and a few have already popped up.

Looking at the S&P500