Morning Note

Trading Observations

• ADP premkt, ISM services and JOLTS after the open

• Friday comes with more significant jobs data and it appears increasingly likely the tariff decision (usually release decisions 10ET so if released, likely during market hours)

• CLOSED above 6920 so that now first support, all eyes on 7000 if we can rally ahead of Friday

• We got our first DOW Theory confirmation in over a year

• Transports finally getting going not bearish https://tinyurl.com/3vdz3svp [tinyurl.com] 

• Another day of strong breadth with 2.5/1 Adv/Dec

• Notable that yday that while Mag 7 was down 0.36%, Equal Weight Tech rose by 2.95% 

• II Bulls up to 56.6% from 55.6% with Bears down to 17%, not quite at 60% Bulls and 4/1 Bull/Bear headwind zone

• A lot putting out there so I pass along in case missed... First 5 days of Jan viewed as key, so far up 0.82% 3 days in https://tinyurl.com/2s4xmkac [tinyurl.com]

• Hopefully the rally continues and kicks animal spirits into high gear https://tinyurl.com/zsr4m732 [tinyurl.com]

• As record number of people betting lower silver https://tinyurl.com/mwkr2w5e [tinyurl.com]

Futures

DOW +72

S&P -1

Nasdaq -54

Financials / Consumer / Healthcare

Baird Retail Changes – Downgraded CROX and DECK. Bullish Fresh Pick on UAA as well. They are jumping into “higher beta” plays.

VTYX – Up 57% on news LLY is looking to pick the name up for their portfolio. The $1B name shouldn’t move $1T LLY much. Drugs for inflammatory diseases like Crohn’s and rheumatoid arthritis are the target here.

LLY – PT raised to $1250 from $1080

MRK, GILD, AMGN, BMY – PTs raised at UBS

GME – Up 4% on news of a long-term performance award for the CEO. Holding this one together has been a thing of beauty.

MCD, YUM – Opco upgrades MCD, downgrades YUM.

DECK, WWW – Downgraded at Piper.

W – Wayfair upgraded at Barclays on share gains, +3%.

BJ – Downgraded to underweight at Barclays on weak momentum. No mention of COST, but those who old it will read this report hard.

HSY – Upgraded to overweight at Piper.

GLUE – Up 40% - Positive FDA data.

Technology

AAPL: Goldman commentary - Apple App Store spending down slightly in December - grew roughly 6% y/y in December 2025, decelerating from November as weakness in Games and Entertainment and softer trends in China and Japan offset stable U.S. growth

GOOGL - AI comeback highlighted in financial press.

MBLY (RVER Stock) boosted by confirmation of $900M cash-and-stock acquisition of Mentee Robotics. Stock was +11% • MBLY CES – STOLE THE SHOW - Baird. MBLY was the star of day 1, surprising us with the acquisition of Mentee – a humanoid robotics startup.

Nvidia's Founder and CEO Jensen Huang said he does not believe the Chinese government will make a formal declaration that it has allowed Chinese companies to import the chipmaker's H200 GPUs but that proof will come through purchase orders, Reuters reported.

MSTR climbs 3.9% after MSCI decided for now to keep digital asset treasury companies in its stock market indexes.

W rise 2.8% after Barclays analyst Seth Sigman raised his recommendation on the online home goods retailer to overweight from equal-weight.

Industrials 

BA - ALASKA AIR IS BUYING 110 BOEING AIRCRAFT IN GLOBAL GROWTH PUSH

Albemarle Corporation (ALB) and Amcor (AMCR) upgrading to outperform from neutral at Baird

Axalta Coating Systems (AXTA) and Graphic Packaging (GPK) downgrading to neutral from outperform at Baird

Badger Meter (BMI) initiated underweight at Barclays; $157 PT

Cleveland-Cliffs (CLF) downgraded to sector weight from overweight at KeyBanc

First Solar (FSLR) downgraded to hold from buy at Jefferies; $260 PT

Johnson Controls International (JCI) upgraded to buy from hold at Melius Research

Mohawk Industries (MHK) downgraded to peer perform from outperform at Wolfe

Trex Co. (TREX) upgraded to outperform at Wolfe

Trane Technologies (TT) upgraded to buy from hold at Melius Research

Union Pacific (UNP) downgraded to market perform from outperform at BMO Capital Markets; $255 PT

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