Momentum Strategies Win January

Action to take: Be cautious before the PCE Index on Friday. It’s not a bad time to start playing defense as we look at “banking reserve” weakness in the regionals. This should rear its head in the coming weeks. I’ll explain.

Now that both Fed and BOJ hurdles have been cleared, the stage is set for capital flows to pick up. With the ECB cutting rates this morning to 2.75%, investors can finally start putting money to work. The question is whether this capital continues piling into a handful of tech names or if we finally see some breadth in this market. So far this morning, futures are up, with Russell leading the charge.

Keep an eye on two key levels: The Nasdaq 100 (QQQ) must reclaim $530 to retake resistance, as we’re still trading in the shadows of Monday’s DeepSeek selloff. The concentration of AI tech at the top of the market continues to weigh heavily. A drop below $15.80 on CBOE’s Volatility Index (VIX) would be a bullish signal today.

As usual, Apple (AAPL) could be the deciding …