Thoughtful insights and approachable analysis.

• SPX500 uptrend intact, with bullish EMAs and RSI above 50 signalling firm positive momentum.
• Bullish setup: gap, EMAs, RSI>50—while Walmart expands drone fulfilment and joins Nasdaq-100.
• Breakout with bullish EMAs and RSI>50 as Alibaba's AI and regulatory tailwinds lift sentiment.

Quick Market Overview

U.S. stocks nudged to new highs as investors looked past political turmoil at the Fed and turned their attention to fourth-quarter earnings, which are expected to show another wave of robust profit growth fuelled by AI spending and a weaker dollar. Banks and card issuers lagged after President Trump floated a temporary cap on credit-card rates, while the broader market benefited from confidence that Corporate America can extend its earnings streak into 2026.

General Market Health (SPX500)

As we move into Q4 earnings season, the SPX500 remains in positive territory. It has posted a second higher peak after its latest higher trough, reinforcing the prevailing uptrend. The RSI is holding above 50, indicating positive momentum, while the EMAs are aligned in a bullish formation that confirms the broader market's underlying strength.

Earnings season set to test 2026 confidence

Earnings season kicks off with the big U.S. banks, offering an early read on corporate health and market direction. Analysts expect S&P 500 Q4 earnings to grow in the mid-single digits, helped by resilient fee income and net interest margins, though sector performance may be uneven. Beyond beats, guidance will matter most: upbeat outlooks could bolster confidence in 2026 earnings. Tech and financials are seen as key contributors, supporting expectations for continued earnings and moderate revenue growth.

Potential Trade Setups

Walmart Inc (NASDAQ: WMT)

WMT charted a gap in yesterday's price action. It will be interesting to see if this is a breakaway gap and the start of the share price's next leg higher. The company is trading near an all-time high with its EMA in bullish formation. The RSI has been constructive since the end of November and has moved back above 50. If it maintains above this level, the underlying momentum will be bullish.

Walmart is widening its drone-delivery network, adding 150 stores over the coming year and aiming to reach more than 40 million customers across major U.S. cities. Working with Alphabet's Wing, the retailer plans over 270 drone sites by 2027 as ultra-fast fulfilment becomes a competitive battleground. Drone usage has already surged in pilot markets, while Walmart's profile is set to rise further as it joins the Nasdaq-100 this month.

Alibaba Group Holding Ltd Sponsored ADR (NYSE: BABA)

BABA has broken above its downtrend line on strong volume, printing a long blue candle. The EMAs have shifted into bullish alignment, and the RSI has crossed above 50, the favourable side of the indicator. Holding above 50 would suggest supportive underlying momentum, while a move back below 50 would undermine the signal.

Alibaba's Qwen models have become the world's most-downloaded open-source AI systems, topping 700 million pulls with tens of thousands of applications built on them. The surge is bolstering Alibaba Cloud, which is already growing at a solid double-digit pace. Sentiment also improved on signs regulators may curb China's food-delivery price war, a shift that typically favours larger platforms like Alibaba by easing margin pressure and squeezing smaller rivals.

Hot News, Cold Logic

Bank of America expects tech to power most Q4 earnings growth again, with S&P 500 profits seen up 7–11% on resilient demand and constructive guidance. But investors are increasingly differentiating between genuine AI winners and weaker names as several high-profile stocks pull back. Strategists highlight healthier signs beyond tech, from firmer cyclicals to better small- and mid-cap action, suggesting the 2026 rally could rest on a broader base than past years.

Final Thought

Markets are treading a fine line in mid-January 2026, with global equities buoyed by Japan's record-high stock surge and broad AI-led optimism, yet tempering gains as geopolitical risks, oil supply fears and central-bank uncertainty linger, leaving the long-term bull case intact but underscoring the need for selective positioning in an environment where upside is still possible but volatility remains a live threat.