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As we enter the first trading week after President Trump’s re-inauguration, the S&P 500 is showing cautious bullishness. With the market closed on Monday for Martin Luther King Jr. Day, Tuesday was the first real test of momentum post-inauguration.
While we did see a push higher, bringing us back to previous highs, the real question is whether we have the strength to break out of this range.
The S&P 500 has been stuck in a wide-range chop since the election results, creating a box of high volatility without a clear directional move.
The all-time high around $609 in the SPY is the key level to watch on the upside, while the $570-$575 zone serves as the lower boundary of this range. Until we see a decisive breakout above or below these levels, it will be a challenge to get strongly directional.
The shortened trading week due to Monday’s holiday adds another layer of complexity. Fragmented weeks often struggle to build consistent momentum, and this one appears no different.
Even though the market is closer to testing the upside, the lack of a strong catalyst — whether from earnings or policy implementation — makes a clean breakout unlikely this week.
Speaking of catalysts, President Donald Trump’s return to office hasn’t delivered any definitive policy actions yet. While tariffs on China and Canada were briefly mentioned, nothing concrete has been signed into policy.
Without substantial developments on that front, the market remains heavily reliant on earnings to provide direction.
Looking ahead, we’re in the early stages of earnings season, with a heavier slate of reports coming next week. This delay further supports the idea that we might retest the all-time highs but struggle to surpass them in the near term.
A pullback could be on the table before we see any real momentum to the upside.
The market’s current state of indecision isn’t unusual following significant events like an inauguration. For traders, the key is patience.
Until the S&P 500 clears $609 to the upside or drops below $570, there’s no need to force a directional play. Instead, it’s a time to observe how earnings unfold and whether any unexpected policy announcements shake up the narrative.
For now, I remain cautiously optimistic. The broader market looks stable, with sectors like Industrials and Technology showing some strength.
But stability isn’t the same as momentum. Until we see broader participation across sectors and a decisive breakout from this range, the S&P 500 will remain stuck in neutral.
Keep an eye on earnings and any surprise policy developments — those will be the drivers to watch this week.
Kane Shieh
Kane Shieh Trading
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