OVERVIEW


 

This past week saw a mixed performance in U.S. financial markets. The S&P 500 slipped 1.00%, the Dow managed a modest gain of 0.27%, and the Nasdaq declined 1.64%, while small caps also struggled, with the S&P 600 down 0.49%.

International markets held up better, with developed markets (EAFE) rising 0.80%, while emerging markets eked out a 0.31% gain. The U.S. dollar strengthened by 1.06% against major global currencies.

Bond markets were relatively stable, with long-term Treasuries climbing 0.82%, intermediate-term Treasuries up 0.47%, and short-term Treasuries increasing slightly by 0.08%. Investment-grade bonds and high-yield bonds saw small gains of 0.34% and 0.20%, respectively.

Commodities struggled, with broad commodities down 1.10% and oil dropping 1.98%. In contrast, gold surged 1.01%, offering a safe-haven boost. Meanwhile, real estate edged down 0.18%. Volatility spiked, with the VIX soaring 10.64% for the week.

 

KEY CONSIDERATIONS


 

Bulls, Bears, and Barometers The stock market isn’t just about numbers on a screen. It’s a story. A cycle. A battle between optimism and fear—and sometimes, a little superstition.

Right now, two indicators—one driven by sentiment, the other by seasonality—are whispering clues about what comes next.

First, sentiment.

The Investor Intelligence Bull-Bear Spread, shown below, tracks what financial newsletter writers are thinking—how many are bullish; how many are bearish.

 

 

When optimism runs high, markets tend to thrive. Right now, the spread has climbed to 18.0, up from 14.6 last week. That’s progress, but it’s still shy of the profit zone—the level where past market rallies have gained real traction.

Here’s the thing: you need bulls to have a bull market. The biggest gains happen when investors believe. When they jump in, not sit on the sidelines. Today, there’s hesitation, a cautious optimism. But if sentiment keeps rising, history suggests the market could follow.

And then there’s the January Barometer, a market phenomenon tracked since 1950. It’s simple: if the S&P 500 ends January in the green, the rest of the year tends to follow.

 

 

The numbers don’t lie—positive Januarys have led to average yearly gains of 17.22%. Negative Januarys? Down 1.9% on average. That’s not just a gap. It’s a canyon.

The good news? January ended positive for the month. And that matters, because history shows that when sentiment improves and seasonality aligns, markets tend to climb. This isn’t a guarantee. But it is a signal. A nudge in the right direction, if you will.

For now, the market stands at a crossroads. Sentiment is better but not booming. Optimism is creeping in but not flooding the streets.

If the bulls take charge, momentum could build. If they hesitate, the rally could stall.

Either way, the market will tell its story—and our indicators will be there to report it.

 

This is intended for informational purposes only and should not be used as the primary basis for an investment decision.  Consult an advisor for your personal situation.

Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly. 

Past performance does not guarantee future results.

The S&P 500 Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.