Markets are digesting mixed sentiment from last week’s earnings reports, ongoing geopolitical uncertainties, and anticipation around key economic data releases. With a sentiment index tilting into pessimistic territory, investors are cautiously monitoring trends across equities, cryptocurrencies, and broader economic indicators.

In this edition: key earnings to watch, the latest on inflation and retail sales, updates from the crypto market, technical levels to track for the S&P 500 and Bitcoin, and the top news stories shaping market moves.

Market Sentiment This Morning

• Sentiment Index Score: -23 (Pessimistic)
• Breakdown:
  • Bearish: 53%
  • Pessimistic: 8%
  • Optimistic: 10%
  • Bullish: 29%

Sentiment across major news sources leans bearish this morning, reflecting concerns over geopolitical tensions and economic policy uncertainty. However, with 34% bullish sentiment, pockets of optimism remain, likely tied to potential opportunities in select industries.

---

Key Earnings Reports This Week

• Upcoming Releases:
  • Adobe Inc. (ADBE): Analysts expect strong performance driven by cloud software demand.
  • Oracle (ORCL): Focus on AI cloud services and enterprise growth.
  • Lennar Corp (LEN): Homebuilder’s results will shed light on housing market trends amidst high interest rates.
  • Costco (COST): Investors are eyeing Costco’s earnings call to gauge consumer spending trends and the performance of its membership-driven retail model during the holiday season.

---

Earnings Recap from Last Week

• DocuSign (DOCU): Missed expectations, with management pointing to weaker enterprise demand.
• Lululemon (LULU): Beat earnings estimates, with growth in direct-to-consumer sales.

Takeaway: Consumer resilience varies, with essentials outperforming discretionary spending categories.

---

Upcoming Economic Data Releases

• CPI Data (Wednesday)
  • Headline inflation is projected to increase slightly to 2.7% YoY, with core inflation also expected to show modest gains.
  • A higher-than-expected CPI print could temper enthusiasm around the Fed’s recent rate cuts and fuel concerns about lingering inflationary pressures, potentially weighing on risk assets like equities and cryptocurrencies.
• Retail Sales (Thursday):
  • Gauge of holiday shopping trends—any weakness could weigh on retail stocks.
• Fed Chair Speech (Friday):
  • Investors will watch for clues on future rate hikes or potential easing.

---

Cryptocurrency Market Update

• Bitcoin (BTC): Currently trading at $98,408, down 1.13% from the previous close. Earlier this week, Bitcoin surpassed the $100,000 milestone for the first time, driven by optimism surrounding President-elect Donald Trump’s pro-cryptocurrency stance and the nomination of crypto-friendly officials. Barron’s
• Ethereum (ETH): Trading at $3,868.72, a decrease of 2.65% from the previous close. Despite the recent dip, Ethereum has experienced significant inflows into Ether ETFs, indicating growing institutional interest. Coinspeaker
• Regulatory Developments:
  • President-elect Trump has nominated Paul Atkins, a known cryptocurrency advocate, as the new chair of the Securities and Exchange Commission (SEC). This move is expected to lead to more favorable regulations for the crypto industry. Associated Press
  • The SEC’s litigation efforts against crypto exchanges like Binance and Coinbase may cease under the new administration, signaling a friendlier stance towards the crypto market. The Wall Street Journal
• Key Trend: The recent surge in Bitcoin’s price has been accompanied by increased interest in altcoins such as Ethereum, Solana, and XRP, suggesting a potential “altseason” where alternative cryptocurrencies outperform Bitcoin. Cinco Días

---

Technical Analysis

S&P 500

• Current Level: The S&P 500 is trading near 6,090, having recently achieved record highs. Investopedia
• Support Levels:
  • 5,870: Aligns with the 50-day moving average, offering near-term support.
  • 5,670: Corresponds with a multi-month trendline, providing additional support. Investopedia
• Resistance Levels:
  • 6,675: Projected as a bullish target; however, overbought conditions could introduce resistance before reaching this level. Investopedia
• Indicators:
  • The index is within a rising wedge pattern, suggesting potential shifts.
  • Investors should monitor for signs of overbought conditions, which may precede a pullback.

Outlook: While the S&P 500 exhibits strong momentum, caution is advised due to potential overextension. Monitoring support levels and market indicators is crucial for assessing sustainability.

Bitcoin (BTC)

• Current Price: Approximately $98,408, following a recent all-time high of over $104,000. Barron’s
• Support Levels:
  • $90,500: Initial support in the event of a downturn.
  • $80,500: Secondary support level.
  • $70,000: Strong support, aligning with previous consolidation zones. Investopedia
• Resistance Levels:
  • $110,000: Near-term resistance, with potential for further gains upon breakout. Barron’s
• Indicators:
  • A golden cross has formed on the daily chart, indicating potential for continued upside.
  • However, overbought conditions suggest a possible short-term consolidation or correction.

Outlook: Bitcoin’s trajectory remains bullish, supported by favorable regulatory developments and increased institutional interest. Nonetheless, investors should be prepared for volatility and monitor key support and resistance levels.

---

Top Stories

Geopolitical Tensions

• U.S.-China Trade Concerns: China has banned the export of critical minerals, including gallium and germanium, to the United States in response to U.S. export controls on advanced semiconductor equipment. These materials are essential for products like smartphones and electric vehicles, and the ban could significantly impact the tech industry and global supply chains. Associated Press

Tech Sector Layoffs

• Industry-Wide Reductions: The tech industry continues to experience significant layoffs, with over 130,000 job cuts across 457 companies in 2024. Major firms like Meta, Salesforce, and Dell have reduced their workforces, signaling cost-cutting measures amid economic uncertainty. TechCrunch

AI Investments

• ByteDance’s AI Expansion: ByteDance, the owner of TikTok, is aggressively investing in artificial intelligence by hiring top talent and acquiring large quantities of Nvidia GPUs to build advanced AI models. The company’s AI chatbot, Doubao, has become China’s most popular AI application, surpassing competitors like Baidu’s Ernie Bot. Financial Times
• Elon Musk’s xAI Funding: Elon Musk’s AI startup, xAI, has raised $6 billion in equity financing to enhance its computing capabilities, particularly through the expansion of its supercomputer facility in Memphis, Tennessee. This substantial capital injection positions xAI to compete with industry leaders like OpenAI. New York Post