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The big banks will kickoff earnings on Wednesday, alongside an important CPI reading. The Daily Breakdown digs in.
Monday’s TLDR
The CPI report is front and center
Earnings officially start this week
Lululemon raises guidance
Weekly Outlook
Welcome to the first full trading week of 2025. It hasn’t been easy sledding so far this year, with the S&P 500 down about 4.5% from the record high it hit in December.
This week won’t be a slow one either, with two major economic reports on the docket. That’s with the CPI report on Wednesday and Retail Sales on Thursday.
We obviously want to see strong retail sales results, but without a doubt, the CPI report is the bigger of the two as Wall Street’s inflation worries are front and center right now. While it’s a valid concern, as long as we don’t get runaway inflation and the Fed doesn’t go back to raising interest rates, we can live with mild inflation.
That’s the economic front. On the stock front, earnings start this week, with the big banks set to kick things off on Wednesday. That’s JPMorgan, Citigroup, Wells Fargo and Goldman Sachs.
On Thursday, Morgan Stanley, Bank of America, Taiwan Semiconductor (which has a market cap of $875 billion), and UnitedHealth are scheduled to report.
Friday brings us the monthly options expiration for January, which also includes a lot of long-term options known as LEAPs. When we approach big options expirations, sometimes it can add a dose of volatility and seemingly random price action. Keep that in mind this week.
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The setup — On Holding
Shares of On Holding, maker of On Cloud shoes, are in focus as shares continue to buck the selling pressure in the overall market.
Before breaking out over downtrend resistance on Friday, notice how ONON stock held the 50-day moving average as support. Also notice how the prior resistance area between $52 and $54 has turned into support for the stock.
Now clearing downtrend resistance, investors will look to see if ONON can maintain bullish momentum.
On the flip side, a break below $54 could sap some of that momentum and set up ONON for more downside in the short term. While the stock has been strong, the overall market environment has been volatile lately.
Options
Options could be an alternative for investors who want exposure to ONON, but are nervous to get long the stock. Remember the risk for options buyers is tied to the premium paid for the option — and losing the premium is the full risk.
Bulls can utilize calls or call spreads to speculate on further upside, while bears can use puts or put spreads to speculate on the gains fizzling out and ONON rolling over.
For those looking to learn more about options, consider visiting the eToro Academy.
What Wall Street is watching
LULU – Shares of Lululemon Athletica are moving higher on Monday morning after the retailer raised its Q4 outlook. Management set a new Q4 expected sales range of $3.56 billion to $3.58 billion, up from a prior range of $3.48 billion to $3.51 billion.
ANF – Abercrombie & Fitch shares are moving lower this morning, down about 10% in early pre-market trading despite the retailer raising its Q4 sales outlook. Management now expects Q4 sales growth of 7% to 8% vs. a prior outlook of 5% to 7%.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.
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