The market limped into the weekend, but it was an encouraging week.

Growth declined across all sizes, and small-cap momentum was the most significant declining factor. There was intriguing action in low volume and value, but for the most part, the market marked time.

Momentum

The S&P 500 has rallied strongly after dipping below its 50-day moving average for a couple of weeks. This setup has seen strong rallies in the past.

We’ll look for potential short squeezes in Materials (XLB), Energy (XLE), Consumer Staples (XLP), and Industrials (XLI).

Earnings Season Peaks

Guidance will be more critical than usual as major assaults on the 493 other names in the S&P 500’s ability to step up and deliver bottom-line results occur.

Market Pressure

There are two sources of pressure on the market coming into the week.

Yen Carry Trade

Investors borrow in yen at a very low interest rate and invest in other nations' currencies and assets at higher yields. It's been easy money for a long time, but it had to come to an end.

Remember last August's flash crash when the Bank of Japan raised rates from 0.1% to 0.25%?  On Friday, the Japan 2-year yield closed at 0.71% from 0.51%. This sharp move is forcing selling of assets to repay the borrowed funds before rates move even higher in Japan.

The other concern is DeepSeek R1.

Do not panic as both issues do not change the fundamentals of the market.

Today’s Session

Futures climbed off the lowest levels of the morning. We will use them as key support for the session, including $6,091 for the S&P 500.

Also, we are watching the CBOE Volatility Index (VIX) this morning.

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