January 30, 2026

The major averages rolled into a busy week of earnings and the January FOMC Meeting riding two weeks of losses and closed the period mixed and little changed on volatile trading. Investors took a step back from their rotation into cyclical stocks and scooped up big cap tech and semiconductors early in the week sending the S&P 500 and Philadelphia Semiconductor Index (SOX) to new record highs on Tuesday. The Dow Jones was the laggard weighed down by a -19.61% dive in Dow component UnitedHealth Group (UNH) on weak earnings. Also rattling healthcare stocks was the White House proposing a Medicare Advantage payment option that sent other healthcare providers including Humana (HUM), Molina Health (MOH) and CVS Healthcare (CVS) sharply lower. There was little reaction to the Federal Reserve leaving rates unchanged midweek as the CME Group Fedwatch had projected a 98% probability of no change and the different indexes closed the session almost flat as investors awaited earnings from a few tech heavyweights. Disappointment in Microsoft's (MSFT) growth in Azure sent the stock down -10% but the losses were somewhat offset by a +10% spike in fellow Mag 7 company Meta Platforms (META) after beating earnings estimates on Thursday. The major averages managed to close the session mixed after a 400-point drop in the DJIA was erased and the NASDAQ cut into an opening -2.5% tumble. The iShares Tech-Software ETF (IGV) slipped into a Bear market, down -24% from its high, but semiconductors continued to outperform on stronger earnings and forward guidance. The different indexes took another leg down on Friday on a hot inflation number as December core-PPI jumped +0.7% vs. +0.3% expected. Overall, Q4 earnings released during the period mostly beat estimates with shares of International Business Machines (IBM), Honeywell (HON), Caterpillar (CAT), ASML (ASML), Texas Instruments (TXN) and Apple (AAPL) moving higher on numbers, but the gains were muted as most stocks had rallied into their release. The bigger story was reaction to disappointing numbers with Las Vegas Sands (LVS), American Express (AXP), Qorvo (QRVO), ServiceNow (NOW) and others slammed. Precious metals surged to new record highs daily until Friday when traders sold off gold and silver after their parabolic moves higher. Crude oil prices jumped +8.8% on rising tensions between the US and Iran and Energy (XLE) was the strongest sector jumping +3.78%. Communication Services (XLC) and Utilities (XLU) also outperformed. Healthcare (XLV) was the weakest market group with Consumer Discretionary (XLY) and Materials (XLF) also lagging the broader market. While the DJIA and NASDAQ closed the period lower for a third consecutive week the S&P 500 managed to eke out a gain. The major averages finished January in the plus column with modest gains. Next week is another full slate of earnings with key jobs reports out on Wednesday and Friday. Attention will also be on yields that closed the week at the top of a trading range that if broken, could keep pressure on the stock market's upward momentum.

For the period, the DJIA fell 206.24 points (-0.4%) and settled at 48892.47. The S&P 500 picked up 27.42 points (+0.3%) and closed at 6939.03. The NASDAQ fell 37.42 points (-0.2%) finishing at 23,461.82. The small cap Russell 2000 lost 55.42 points (-2.1%) and settled at 2613.74.

Market Outlook: The technical condition of the market deteriorated as the week ended as Friday's selloff left the different indexes mixed. The technical indicators slipped into neutral to negative readings with MACD, a short-term trend gauge, crossing into bearish ground, while Momentum, as measured by the 14-day RSI neutral and slowing. Key MA support levels were intact but the DJIA, S&P 500 and NASDAQ were approaching their respective 50-day MA which will be watched by traders. A break below that could induce more selling going forward. The VIX, which is looked at as how worried investors are that we could see further weakness or volatility nudged higher during the period but remains in a neutral position despite two spikes during the month with the last on Thursday after the opening drop. A move above 20 over the near-term would hint that traders are growing more concerned that we'll see a pause in the market's uptrend. The secondary indexes finished mixed with the Philadelphia Semiconductor Index and DJ Transportation Index closing higher, but the small cap Russell 2000, which is more sensitive to an uptick in yields, erased about three weeks of gains. All three of these indexes were able to post new record highs recently and are not signaling a broader selloff at this juncture. The sector rotation into more cyclical parts of the market is also supportive of a market that could see further upside.

A chart of these indicators can be found by going to the Market Edge Home page and clicking on Market Recap, which is on the right-hand side of the page just below the Second Opinion Status numbers.

Cyclical Trend Index (CTI): The underlying premise of the CTI is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves. There are five identifiable cycles, each with different time durations at work in the market at all times.

Currently, the CTI is Positive at +3, unchanged from the previous week. Cycles B, C and D are bullish, while Cycles A and E are bearish. The CTI is projected to move to a negative configuration over the next week or two.

Momentum Index (MI): The markets momentum is measured by comparing the strength or weakness of several broad market indexes to the DJIA. Readings of -4 and lower are regarded as bearish since it is an indication that a majority of the broader based market indexes are weaker than the DJIA on a percentage basis. Conversely, readings of +4 or higher are regarded as bullish.

The Momentum Index is Neutral at +0, down two notches from the previous week. Breadth was mixed at the NYSE as the Advance/Decline line lost 280 units while the number of new 52-week highs exceeded the number of new lows on each session. Breadth was also mixed at the NASDAQ as the A/D line dropped 3136 units while the number of new highs out did the new lows on three of the five days. Finally, the percentage of stocks above their 50-day moving average fell to 67.3% vs. 70.9% the previous week, while those above their 200-day moving average eased to 68.7% vs. 71.0% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

Underlying market breadth was mixed during the period with the NYSE and NASDAQ Advance/Decline Lines, leading indicators of market direction, making little progress in either direction over the last few weeks. Generally, the NYSE A/D line will top out a few weeks before a market turn and the NYSE A/D line is coming off a new all-time high the prior week. Until Friday, new 52-week highs in the NYSE and NASDAQ showed solid expansion with the NASDAQ posting 570 new highs the prior Thursday, the most in a single session since November 2024, confirming the broadening out of the rally.

Sentiment Index (SI): Measuring the market's Bullish or Bearish sentiment is important when attempting to determine the market's future direction. Market Edge tracks thirteen technical indicators listed below that measure excessive bullish or bearish sentiment conditions prevalent in the market. The Sentiment Index is Negative at -6, down a notch from the previous week.

Investor sentiment is back to overly bullish as investors chase the major averages to new highs and are buying every dip. Goldman Sachs reported strong inflows into US and Emerging Market equity funds totaling $71 billion last week led by retail investors. The National Association of Active Investment Managers (NAAIM) Exposure Index saw the professionals increase equity holdings climbing to 92.6%, while the Percentage of Bullish Investment Advisors increased to 61.5%, its highest mark since November 2024. According to the American Association of Individual Investors (AAII), retail bulls hit 44.4%. That's the ninth time over the last 12 weeks that retail bullish sentiment has been above their historical level of 37.5%. Finally, according to FINRA, December margin hit another record high after an eighth consecutive month of increased debit balances in customer margin accounts. These become contrarian indicators when reaching extreme levels and investors need to keep an eye out for ÔIrrational Exuberance' if these numbers nudge higher. The reasoning is that if everyone is bullish and committed to the long side, who's left to drive prices higher.

Market Posture: Based on the status of the Market Edge, market timing models, the 'Market Posture' is Bullish as of the week ending 11/28/2025 (DJIA - 47716.42). For a closer look at the technical indicators and studies that make up the market timing models, check out the tables located below.

Industry Group Rankings: What's Hot (23) - What's Not (7): The following are the strongest and weakest Industry Groups for the period ending 1/29/26. Strongest: Metals & Mining, Transportation, Technology Hardware and Industrial Goods. Weakest: Technology Services, Insurance, Telecommunications and Infrastructure. To review all the Industry Group rankings in the Market Edge universe, click on the Industry Group tab.

ETF Center: The top performing ETF categories for the week ending 1/29/26 were: Commodity-Precious Metals (+12.42%), Commodity-Energy (+8.91%), Commodity-Blend (+6.69%), Commodity-Base Metals (+5.15%) and Sector-Energy (+4.23%). The weakest categories were: Blend-Small Cap (-2.85%), Growth-Small Cap (-2.79%), Specialty Health (-2.09%), Sector-Consumer Discretionary (-1.64%) and Specialty Retail (-1.56%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT