After the first two weeks of the trading year, the perennial January effect is holding true to form. The year to date gains so far the key indices are; Dow Jones Industrial Average (chart) + 1.67%, the Nasdaq (chart) +4.05%, the S&P 500 (chart) +2.5% and the Russell 2000 (chart) +3.14%.

Fast forward to this upcoming week and we are heading full throttle into fourth quarter earnings reporting season. The markets will be closed tomorrow in recognition of the MLK holiday, however, on tap for Tuesday from the banking sector is earnings out of Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC). Later in the week we will hear from tech titan Google (NasdaqGS: GOOG), global powerhouse IBM (NYSE :IBM) and Microsoft (NasdaqGS: MSFT) just to name a few.

Between companies reporting their earnings results and the ongoing drama unfolding out of Europe, I am expecting volatility to kick in significantly. Also, the VIX ($VIX) which is a widely used measure of market risk, has been relatively complacent over the past few weeks trading at the lower end of a multi-month range. Certain market technicians interpret that this type of complacency and lower end value could mean an imminent move up in volatility. Whatever the case may be, the markets are seemingly poised to start trading in much wider ranges. Good luck to all.

Have a great week 🙂

~George Mahfouz