Here Comes the Squeeze...

Strong bank earnings and lower inflation outcomes fuel a rally. With banking stocks moving higher and core inflation in focus, this likely triggers a short squeeze for into the end of the month.

Action to Take: Bank earnings are off to a strong start, with JPMorgan (JPM), BlackRock (BLK), and Wells Fargo (WFC) all beating expectations, setting a positive tone ahead of this morning’s crucial CPI print. Options markets are pricing in a 1% move in either direction, so keep your head on a swivel. While we typically avoid adding positions under negative momentum, today's setup deserves close attention. This sort of buying pressure is going to suck a lot of retail investors back into the markets - but we have to urge caution over the next few weeks. None of the risk - trade, tariffs, refinancing, geopolitical tensions - have gone away. We got another inflation report that was still above the official target level.

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Momentum: Negative Trend Since December 10.

On Tuesday, markets showed signs of rotation as investors shifted their focus beyond the Magnificent Seven. The S&P 500 and Nasdaq barely moved in an otherwise choppy sessio…