Wall Street were little changed last Friday amid subdued moves in the Treasury yields, while the US dollar saw further firming (+0.3%) following recent sell-off. Some reservations continue to linger around mega-cap tech stocks ahead of several key earnings this week in the likes of Alphabet, Microsoft and Meta Platforms, as recent releases from Netflix and Tesla suggest that earnings expectations may be priced close to perfection. Overbought technical conditions and ‘extreme greed’ sentiments as shown from the CNN Fear & Greed Index may call for some cooling in the recent equities rally, although the broader trend still leans towards an upward bias.

The start of the new trading week could potentially bring about some indecision, before volatility picked up on the onslaught of big tech earnings and the FOMC meeting towards the latter half, alongside meetings from the European Central Bank (ECB) and the Bank of Japan (BoJ). Up today, a series of global flash purchasing managers index (PMI) data will be on watch, with consensus largely for global economic conditions to stay soft.

With the pick-up in the US financial sector lately on earnings releases (XLF +3.1% over past week), perhaps one to watch may be the SPDR S&P Regional Banking ETF, which has recently broken above the neckline of an inverse head-and-shoulder formation. The neckline projection suggests an eventual target of the 56.10 level, with immediate resistance to overcome at the 46.94 level for now. Increasing moving average convergence/divergence (MACD) and a move above its 100-day moving average (MA) seem to support some upward momentum in place.