Weekly Stock Market Update & SPY Technical Analysis
The “January Effect” refers to a historical tendency for stocks, particularly small cap names, to perform better in January than in other months.
Who benefits from the January Effect?
Small caps tend to benefit most because of timing. Around December / year-end, investors sell-off investors often sell off underperforming or losing positions to harvest tax losses. This selling pressure disproportionately impacts smaller, less liquid stocks, pushing prices below fair value. Once the calendar flips to January, that artificial selling pressure fades, fresh capital enters the market, and many of these same small-cap names experience a rebound as buyers step back in.
We saw this happen in real time last week as markets pushed higher to kick off the first trading day of 2026, but we are now entering the first full week, which will give a deeper insight into where capital is flowing as this could set the stage for the year’s themes. We’ve already highlighted several themes in our weekly watchlist, we’ll continue watching for more as the month progresses and sharing with our Hyper Stocks Pro members.
China & Semiconductors:
Semiconductors were among the top gainers to start the new year, with strength across names like Nvidia, TSMC, AMD, ASML, Lam Research, and Micron. Part of the optimism was driven by the debut of Biren, a Chinese semiconductor company viewed as a direct competitor to Nvidia. Biren surged more than 75% on its first day of public trading, sparking renewed enthusiasm across global semiconductor stocks.
However, a closer look at price action tells a more nuanced story. Nvidia and Broadcom pulled back from their intraday highs, while Lam Research, Micron, ASML, and TSMC managed to hold onto their gains. This divergence likely reflects investor perception that Biren poses a more direct competitive threat to Nvidia specifically, rather than to the broader semiconductor supply chain. The move serves as a reminder that the U.S. and China remain locked in an ongoing race to develop the most advanced and efficient AI technologies.
As for Chinese stocks as a whole…the strong start to the new year is a good signal, but investors should remain cautious. Volatility tends to be higher in these stocks because of uncertainty around China-U.S. relations and Chinese regulations. Since interest rates are coming down, risk tolerance for these stocks may increase this year, but it’s a theme we’ll continue monitoring closely.
Venezuela’s Situation:
There’s likely to be a knee-jerk reaction to the downside early in the week because of the Venezuela-U.S. conflict, but markets have historically shrugged off geopolitical conflicts. In the long run, these massive regime changes do change the playing field, but on a more gradual scale. American oil companies, particularly Chevron, are set to benefit from Venezuela’s oil reserves, but aging and unkept infrastructure means it’ll be months or years before output can significantly increase.
Further implications of the removal of Venezuela’s Maduro include a massive blow to Iran and Russia. The country served as a key ally to both regimes, allowing them to mitigate U.S. sanction pressures and influence. This move gives the U.S. leverage in peace negotiations between Ukraine and Russia.
Economic data this week:
- ADP Employment Report / Job Openings (Wed)
- U.S. Factory Orders (Wed)
- U.S. Trade Deficit / U.S. Productivity / U.S. Consumer Credit (Thu)
- U.S. Unemployment Report (Fri)
We’ll be covering these reports and their impact on the market throughout the week in our daily morning updates for our Hyper Stocks Pro members. .
SPY Technical Analysis:
While our general market outlook remains bullish, SPY’s technical analysis over the past six weeks suggests a “triple top” pattern is emerging around 690.00. The index has faced that level three times since late November and was rejected every time, suggesting that buyers aren’t willing to pay the higher premium at this time, which makes sense considering the geopolitical uncertainties and new year. The same triple top range could also mark a massive breakout if a positive catalyst increases buying confidence. We’ll be watching SPY for a breakout above 690.00-692.00 for continuation.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of capital. Always conduct your own research or consult with a licensed financial advisor before making investment decisions.
Hyper Stocks and its contributors may hold positions in some of the securities or assets mentioned above. These positions are subject to change without notice. Any opinions expressed reflect current views at the time of writing and are not guarantees of future performance. Past performance does not guarantee future results.