Thoughtful insights and approachable analysis.
- GE: higher lows, bullish EMA crossover, RSI above 50, strong fundamentals, solid uptrend intact, awaiting resistance break for confirmation and continuation
- RY: higher low, EMAs reclaimed, RSI above 50, momentum improving, fundamentals strong, trend intact, resistance test likely, upside favoured near-term continuation
- MMM: sharp rebound meets resistance; bullish EMA crossover and RSI above 50 support upside, but rejection risks consolidation toward moving averages

Quick Market Overview

Markets flipped back into risk-on mode, brushing off last week's AI-related jitters as equities advanced across the board. The S&P 500 and Nasdaq rebounded sharply, while the Dow notched another record close, pointing to rotation rather than a broader pullback.

Investors are selectively moving back into technology without unwinding positions in industrials, banks and other "real economy" sectors, keeping the rally well-balanced. With most companies beating earnings expectations so far, the focus now shifts to upcoming jobs and inflation data to test whether the market's Goldilocks narrative can endure.

General Market Health (SPX500)

The SPX500's EMAs have crossed into bullish territory (black circle), while the RSI has pushed above the 50 level. Overhead resistance remains near the 7,000 mark (red shaded area). Friday's session produced a strong bullish candle, with the index gaining 2.3%, signalling a decisive impulse move and establishing a solid foundation for further price action. As long as the RSI holds above 50, underlying momentum should remain supportive, increasing the likelihood of a sustained push through resistance.

The Fed's Inflation Reality Check

The Federal Reserve's attention has swung back from a cooling jobs market to the persistence of inflation, with this week's employment and CPI releases set to shape expectations for any rate cuts in 2026.

January payrolls are forecast to rise by around 55,000, enough to keep unemployment steady at 4.4% and suggest the labour market has found a floor after last year's slowdown.

Inflation remains the tougher challenge: CPI is expected to increase 0.3% month on month, with annual inflation easing only slowly toward 2.5%, still well above the Fed's target.

With policymakers concerned that price pressures may be stalling rather than fading, there is little urgency to ease policy, prompting markets to push expectations for the next rate cut back toward mid-year at the earliest.

Potential Trade Setups

GE Aerospace (NYSE: GE)

Price action
- Following the sharp sell-off into late January, price established a higher low and reclaimed the short-term moving averages.
- The circled area highlights a bullish moving-average crossover, with the faster EMA crossing above the slower EMA, a signal that typically points to trend re-engagement rather than a simple dead-cat bounce.
- The subsequent strong bullish candle confirms an expansion in momentum.
Trend context
- The broader structure remains an uptrend, with GE up roughly 54% over the past 12 months.

Momentum (RSI)
- RSI has moved back above the 50 level and continues to trend higher.
- This shift from below to above 50 usually marks a transition from bearish to bullish momentum.
- Importantly, RSI is rising without entering overbought territory.

Key levels to watch
- Immediate support: the rising short-term moving averages and the recent higher low.
- Major resistance: the upper range and prior peak (black horizontal line). A daily close above this level would materially strengthen the trend outlook.

Bottom line
- The right-hand side of the chart shows a constructive recovery, defined by higher lows, a bullish EMA crossover and improving momentum.
- The setup is bullish, but confirmation of trend continuation depends on price holding above the moving averages and breaking decisively through resistance.

Fundamental backdrop
GE Aerospace delivered strong Q4 and full-year 2025 results, with revenue up roughly 18–20% and adjusted EPS ahead of expectations. Performance was driven by a 74% surge in orders and a backlog of around $190 billion. For the full year, both revenue and profit rose meaningfully, and guidance points to low double-digit revenue growth and higher EPS in 2026. Analysts broadly maintain positive ratings and elevated price targets, reflecting confidence in sustained demand for engines and services. While shares pulled back after earnings, the underlying fundamentals continue to signal solid operational momentum and expanding free cash flow.

Royal Bank of Canada (TSX: RY)

Trend & Structure
- Price has reclaimed both the short- and medium-term moving averages, with the faster EMA (green) back above the slower EMA (orange), a classic signal of trend re-engagement.
- The circled area highlights a clean pullback that formed a higher low, followed by an impulsive bullish candle.
- This shifts the short-term structure from correction to continuation.
- RY has appreciated around 43% over the last 12 months.

Interpretation: The prior dip appears corrective rather than distributive, with buyers clearly defending the broader trend.

Momentum (RSI)
- RSI has rebounded sharply from sub-40 levels and is now pushing into the 50–55 zone.
- Holding above this area typically confirms a bullish momentum regime.

Interpretation: Momentum is rebuilding and now supports further upside rather than signalling exhaustion.

Resistance & Upside Risk
- Price is advancing toward the prior highs marked by the black horizontal resistance.
- Given the strength of the most recent candle and improving RSI, a direct test of this level looks likely.
- A decisive break would open the door to renewed trend acceleration.

Bull-Case Invalidation
- A sustained move back below the green moving average, combined with RSI slipping under 50, would point to a false breakout and weaken the bullish case.

Bottom line
The right-hand side of the chart shows a textbook bullish reset:
- Higher low
- Moving averages reclaimed
- RSI back in bullish territory

Unless price is firmly rejected at resistance, the path of least resistance remains higher, with momentum now aligned in favour of continuation.

Fundamental backdrop
Royal Bank of Canada delivered strong fiscal 2025 results, with net income of C$20.4 billion and diluted EPS of C$14.07, both up around 25% year over year. Return on equity improved to roughly 16.3%, reflecting stronger profitability across the group. The bank's diversified business mix, spanning personal and commercial banking, wealth management, capital markets and insurance, helped it navigate mixed economic conditions while exceeding expectations. RBC also raised its quarterly dividend, signalling confidence in earnings durability and cash flow generation. With a forward dividend yield of about 2.8% and ROE comfortably above many peers, valuation and profitability metrics continue to support a broadly positive analyst outlook anchored by the bank's resilient earnings engine.

3M Company (NYSE: MMM)

Price action
- The sharp rebound from the late-January low signals strong upside momentum, with consecutive bullish candles quickly reclaiming lost ground.
- That said, price has now run straight into a well-defined resistance band around 172–174, an area where prior rallies have consistently stalled.
- The latest candle shows clear rejection from this zone, suggesting selling pressure remains active.

Trend & structure
- The fast-moving average has turned decisively higher and crossed back above the slower average, confirming a recovery in the short-term trend.

Momentum (RSI)
- RSI has pushed back above the 50 level and is moving toward the upper end of its recent range.
- As long as RSI holds above 50, the risk of a breakout through the red resistance zone remains alive.

Key takeaways
- Momentum currently favours the bulls, but the chart is sitting at a pivotal resistance area.
- A decisive daily close above the red zone would open the door to further upside, while repeated failure here would likely lead to consolidation or a pullback toward the rising moving averages.

Fundamental backdrop
On the fundamental side, 3M continues to deliver modest but steady progress, which likely underpins investor confidence as the stock tests technical resistance. In Q4 2025, the company beat earnings expectations with adjusted EPS of roughly $1.83 and revenue around $6.0–$6.1 billion, supported by positive, though unspectacular, organic sales growth. Management guided 2026 adjusted EPS to approximately $8.50–$8.70, broadly in line with consensus and pointing to stability rather than acceleration. Capital returns remain a key support, with billions returned through dividends and buybacks over the past year, including a recent dividend increase. Overall growth remains measured, and pressure in certain segments has kept sentiment mixed, even as cash flow strength provides a steady foundation beneath the shares.

Hot News, Cold Logic

Despite recent tech volatility, the broader US equity market remains on firm footing, with leadership rotating rather than breaking down.

The Dow Jones Industrial Average has pushed to new highs as investors rotate into established blue chips, while around three-quarters of S&P 500 companies have beaten earnings expectations and revenue growth is running at a two-year high.

The pullback in software has also made parts of tech look more reasonably priced.

With unemployment expected to hold near 4.4%, upcoming labour data could either reinforce economic strength or revive rate-cut hopes at the Federal Reserve, both of which would support equities.

Final Thought

Global markets are balancing near record highs with renewed equity and tech strength as Japan's political clarity and strong earnings hope drive confidence, yet the backdrop remains finely poised with mixed data, continued rotation out of high-growth assets and key U.S. economic releases ahead, suggesting upside is still possible but volatility and selective risk management are essential