| | | | How Big Is AI Adoption?
For all the talk about AI and how many jobs it can or will replace. How heavy or maybe how light is the actual adoption of AI into business? What sectors are adopting faster and slower? Let's take a look!...
Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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Earnings Season Playbook: How Financial Stocks Signal the Next Big Rotation
As we dive into the first trading week of 2025, the market is already gearing up for one of its most predictable trends — the flow of capital into the Financial (XLF) sector ahead of earnings season.
This quarterly phenomenon, a hallmark of the market's rhythm, typically starts with financial heavyweights like Goldman Sachs (GS), JPMorgan (JPM) and Wells Fargo (WFC), which all report on Jan. 15.
The process is straightforward: Money flows into financials in anticipation of strong earnings reports, then rotates out and into Big Tech stocks as their earnings approach. It’s a reliable pattern we see quarter after quarter, creating tradable opportunities for those who know how to spot the moves.
This quarter, I’m already seeing some signs of positioning in stocks like GS and JPM. Historically, we’ve observed these stocks rallying into their earnings, as fund managers aim to capture the initial surge in optimism.
However, caution is key — what goes up often comes down quickly as capital rotates out post-report.
If you’re looking to play this trend, leveraged ETFs like FAS (a 3X bullish Financials ETF) could offer a way to capitalize on short-term price movements. Just be aware that leverage amplifies both gains and losses, so position sizing and risk management are critical.
Another layer of interest this year is the macro backdrop.
With light unemployment claims and PMI data on deck, the market’s broader sentiment will inevitably influence how financials perform. Any unexpected weakness in economic data could dampen the sector's momentum, so keeping an eye on the week’s reports is essential.
Finally, don’t forget the potential longer-term implications of this cycle.
While financial stocks might see a pre-earnings rally, the overall trajectory of the market — including how the Federal Reserve navigates 2025 — will likely determine whether these moves are merely temporary or the start of a broader trend.
Remember, the name of the game is adaptability. If financials show signs of overextension before earnings, it may be better to wait for post-earnings pullbacks to consider new positions. Conversely, if the rally gains steam, there could be room for tactical trades in both individual stocks and sector ETFs like XLF.
It’s not just about spotting the trend — it’s about knowing when and how to act. As always, stay disciplined, and don’t chase.
The market loves to lure traders in, only to yank the rug out from under them when they least expect it. Let’s make 2025 a year of smarter trades and better decisions.
Today’s Daily Chart Setup: Kimbell Realty (KRP)  |
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