MARKET WRAP

A strong across the board rally to begin the new week. SPY/SPX closed +0.9%, QQQ 0.6% and IWM +1.9%. SPY/SPX is now just 1% from the highs, QQQs are about 2.5% away from the highs. QQQs have bounced about 5% from a week ago. Once again, TLT +0.9% and USO -1/7% created some space for equities to climb. Netflix NFLX is up big (+12% and new all time highs) after hours on earnings. Options were only pricing about an 8% move. We mentioned last week to keep an eye on expected earnings moves vs actual moves as they can be indicative of traders/investors potentially being off-sides. A little more on that in the form of FOMO market and VIX watching near highs at the bottom of this email. Also, MRKT Call with several earnings previews and some potential trades.

MRKT MATRIX: January 21, 2025

Today’s Top Stories:

• Dow rallies Around 500 points as investors feel Trump’s tone on tariffs is softer than feared (CNBC)

• Xi Dodges Early Trump Tariffs, Buying China Time to Influence US (Bloomberg)

• Interest rates won’t fall as fast as expected if tariffs stoke inflation, UBS CEO says (CNBC)

• JPMorgan ‘War Room’ Examining First Days of Trump Presidency (Bloomberg)

• Trump to announce AI infrastructure investment backed by Oracle, OpenAI and Softbank (CNBC)

• Jefferies downgrades Apple to rate underperform rating, says revenue may disappoint (CNBC)

• Huawei seeks to grab market share in AI chips from Nvidia in China (FT)

• Biden’s Chips Team Hands Off $52 Billion Program to a Skeptical Trump (Bloomberg)

• Tesla brand value shed $15 billion in 2024 with aging lineup, Musk at helm, researchers found (CNBC)

• Trump Halts TikTok Ban, Giving App More Time to Find a Buyer (Bloomberg)

• Hamas Is Effectively Back in Control in Gaza (WSJ)

Today’s MRKT Call is Presented by Robinhood

Has Apple Fallen Too Far From The Rally?

Guy and Dan look at AAPL following several analyst downgrades. Call of the Day on GM, check ins on AXP, PG, the airlines and NFLX into earnings. Finally, your questions, including ORCL with the new administration in focus.

Click here to access all of the charts mentioned in today’s MRKT Call.

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Today’s Okay, Computer. is Presented by RBC and Current

Tech Titans, TikTok, and Tesla Get Political Under New Administration

Dan Nathan and Guy Adami discuss the competing interests and strategic moves of various tech CEOs, including TikTok's CEO and Sam Altman of OpenAI, as they cozy up to the government and Musk's proximity to President Trump. They explore the implications for major companies like Apple, Google, Amazon, and Tesla, touching on regulatory issues, market dynamics, and earnings reports. The conversation highlights the impact of TikTok's potential ban on Apple sales, the recent downgrade of Apple by Jeffries, and the performance of Tesla amidst a price war and weak demand in China. The duo also examines Netflix's market position ahead of its earnings report and the overall influence of major tech companies on stock movements.

Timecodes

0:00 - Tech Gets Political

8:05 - TikTok Flip Flop

11:50 - NFLX Preview

16:40 - AAPL Downgrade

23:00 - Tesla Troubles

What’s Next?

The VIX closed near 15, which is worth monitoring. Firstly, tomorrow is VIX expiration, a time that can sometimes add a bit of volatility to both the VIX and equities in the following days. If however we have a few uneventful days in a row, and a creep higher in towards prior SPX highs, keep an eye on how the VIX behaves to get a sense of the confidence in the rally, and the amount of risk traders are associating with buying stocks at those all time highs.

For example, if the VIX grinds lower, as equities grind higher, that tends to be a sign of a confident broad based rally (and traders selling calls, not bothering to buy puts). Very bull market type behavior. If however, we get to new highs, and the VIX is creeping higher with stocks, that tends to signal two things, market participants' apprehension about a possible sharp drawdown (buying stocks but also buying puts in case they get trapped at the highs) or second, the onset of FOMO-driven activity in certain sectors, like traders chasing upside calls in meme stocks. (these two scenarios aren’t mutually exclusive). Should the VIX be higher than it is now, and equity indices are higher than the are now it’s the sign of a fairly chaotic market at highs, with doubts and FOMO lingering.

In the short term, SPX 6000—previously a key options resistance level—has now expired. The next area to watch is a place we already are, SPX 6050, which carries smaller gamma resistance. A continuation of this rally might resemble a pattern of 50-point advances followed by brief pauses at these smaller gamma resistance levels.

SPX is currently within 1% of its all-time highs, while QQQ is about 2.5% away. These prior highs are the next truly key levels to watch. Should those new highs occur, the state of the VIX—whether it’s at 14 or closer to 17—will serve as a sentiment gauge, offering insight into trader/investor confidence.

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