The Week Ahead

Following last week’s 3% rally, the SPX is back above 6000. Futures briefly opened during the MLK holiday and suggest potential upside momentum for tomorrow. As noted last week, the options expiry was significant, clearing much of the near-term overhead supply and potentially paving the way for the market to challenge prior highs—though nothing is guaranteed. Additionally, the expiration of many single-stock name options coincides with the heart of earnings season, creating the potential for sharp moves (in either direction). Pay close attention to single-stock earnings reactions compared to expected moves, as they can reveal insights about liquidity and whether market participants are positioned offsides overall.

Below is a snapshot of expected moves for the shortened four-day week based on Friday’s options close. Notably, all are lower than last week’s five-day expectations, except for Oil (USO), which stands out in its increasing expected volatility.

Expected Moves for the Week:

• SPY: 1.3%

• QQQ: 1.7%

• IWM: 1.9%

• USO: 3.4%

• TLT: 1.4%

Economic and Earnings Calendar

• TUESDAY

  • Earnings Pre-market: MMM 5%, SCHW 5.5%

  • 8:30am: Canadian CPI

  • Earnings after hours: NFLX 8.2%, UAL 9.9%, COF 5.3%

• WEDNESDAY

  • Earnings Pre-market: PG 3.1%, ABT 3.3%, JNJ 2.4%, HAL 4.0%

  • 10:15 ECB Lagarde Speech
    Earnings after hours: KMI 3.1%

• THURSDAY

  • Earnings Pre-market: AAL 7.2%

  • 8:30am: Initial Jobless Claims

  • Earnings after hours: TXN 5.4%, ISRG 4.8%, CSX 3.5%

• FRIDAY

  • Overnight: BoJ Interest Rate Decision

  • Earnings Pre-market: VZ 3.9%, AXP 4.1%

  • 9:45am: S&P Global PMI

  • 10:30am: UoM Consumer Sentiment

SPY/SPX is now just 2% or so from the prior highs. QQQ is about 3.5% away. That’s within range near term if the market sees continued relief on treasury yields and a few of the mega cap tech names help take the market higher on earnings reports. There’s not a ton of economic data this week, and although the earnings calendar is active this week it’s really next week where we see most of those mega-caps. NFLX could be a bit of a vibe check on how people react to the report. The following week has enough market cap reporting that it could drag the market one way or the other with it.

Overall, the swings we saw the past two weeks were largely dictated by treasury yields. If they continue to go lower, that would massively help the bull case for new highs. The fact that we only saw a 5% pullback with yields as high as they got showed some underlying resilience left in equities. Speaking of strong equities in the face of headwinds, Oil (USO) and the dollar (DXY) are two other things to keep on the watchlist. Treasury yields, the dollar, and oil all paused their rise enough to give some breathing room to equities last week. If it was just a pause and they resume their rise, that bearishness from two weeks ago could return quickly.

We’ve got some great content for you all week, punctuated with Mike Wilson, Chief U.S. Equity Strategist at Morgan Stanley joins On The Tape this Friday with his 2025 Market Outlook. Stay Tuned!

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