Near-term Equity trends are bullish, and the week closed with a notable breakout in QQQ as both AAPL, TSLA rebounded while Semiconductor and Semi-cap Equipment stocks showed tremendous strength. Homebuilders also rallied as the Administration has begun to take action to combat affordability concerns for housing. Given that a decision on tariffs is expected early next week, I anticipate that any decision to roll back tariffs might have negative implications for the bond market as yields start to rally on the long end. Overall, January has gotten off to a good start with gains in the first five days of trading, along with broad-based strength from Equal-weighted SPX as both Healthcare and Transportation stocks broke out this past week. While breadth has risen slightly, it remains below levels thought important towards showing a complete comeback to the levels reached last Summer. For now, impressive broad-based US Equity strength is promising towards the idea of additional gains between now and late February as the “Magnificent 7” attempt to stage a comeback. As relayed in recent days, it remains right to position in sector leaders like Industrials, Financials, and Technology with a renewed focus on Healthcare, given this week’s strength.
Three important developments marked Friday’s trading to close the week on a broadly positive note:
- QQQ finally closed up above 652.52, which exceeds the upper boundary of its triangle.
- Homebuilders strengthened materially on Friday, which served to aid Consumer Discretionary
- WTI Crude oil closed up above a downtrend stretching back since mid-summer 2025. While cycles point lower into February, my expectation is that Energy is gradually beginning to bottom out and ties in with my 2026 bullish view.
I’ll go over these one by one. Initially, we see that QQQ has pushed above the upper boundary of its triangle formation. While AAPL and TSLA stabilization is thought to be important, it’s really been the action of the Semiconductor names that have helped to boost QQQ this past week.
As detailed on Friday’s webinar call with Tom Lee, stocks like LRCX and KLAC both look excellent technically and should be favored among his Top Stock ideas list.
My expectation is that QQQ likely rallies up to 655 in the next 6-8 weeks, driven both by Healthcare and also Technology.
Invesco QQQ Trust Series
Homebuilders look quite attractive given today’s XHB breakout
As shown below, the State Street SPDR S&P Homebuilders ETF, XHB, officially rose above an important short-term resistance area and did so on heavy volume and an above-average low-to-high range.
This is important and positive for this sub-group within Consumer Discretionary.
Commerce Secretary Howard Lutnick met with executives from major Homebuilding companies to discuss ways to improve Housing affordability. Moreover, we heard this week that the Administration is considering offering incentives to spur a commitment to build new homes, and also directed Fannie Mae and Freddie Mac to buy mortgage bonds.
This proved to be a boon to the REITS on Friday, while many Homebuilding stocks broke out of well-defined bases.
Some stocks that look particularly favorable technically include BLDR, SKY, TOL, PHM, just to name a few. I expect that this group should work well in the near-term, and as seen below, this appears like a very bullish breakout of a well-defined Reverse Head and Shoulders pattern from last Fall, from October 2025.
I expect XHB to “Make a Beeline” towards initial resistance near $120, with movement over this leading to a likely test and move back to new all-time high territory. Near-term, XHB looks quite attractive and should push higher in the weeks ahead.
State Street SPDR S&P Homebuilders ETF
WTI Crude’s trendline breakout could result in near-term gains before a pullback into more meaningful lows in February
My view is that Energy is gradually bottoming out, and Crude oil’s minor trend breakout did look important and bullish on Friday.
However, given that my cycle composite and most Elliott-wave counts show WTI Crude likely to still have an above-average chance of making new lows into early 2026, I cannot be confident that lows are in for WTI Crude.
That being said, I think it’s right to start to give Energy some focus, given my bullish 2026 view.
Some names to focus on, which I believe are attractive Energy names for this year to consider are: VLO, AR, CNX, CRK, FTI, FTK, BKR, YPF, REPYY, PDS, SU, SND, and TRGP. One should keep close tabs on these names, given that the Energy sector itself has not broken out vs. the S&P 500, and most cycles still show that this Crude rally might turn out to be a false breakout. However, these are the names that look interesting to me, and I’ll revisit this further in the weeks to come.
Light Crude Oil Futures
