SPX rallies into Magnificent Seven earnings and Fed policy

The S&P 500 Index (SPX) is staging a modest comeback, regaining some of the ground lost during a period of heightened volatility sparked by geopolitical unrest under the Trump administration. Right now, the stock is trading near its daily peak and displaying a firmer tone as it seeks to rebuild momentum after the recent stumble.

On the technical front, the picture is turning more constructive. With SPX at $6,907.9, it has arrived at the middle Bollinger Band ($6,902.1)—a key level that often marks the end of a pullback—in this case, the decline that started last week. As it advances within the channel and challenges its central barrier from below, the price suggests a shift from defense to offense. Bollinger Bands are currently in a moderate squeeze, a classic sign of consolidating energy that precedes a directional leg up. A confirmed close above $6,900 would significantly raise the odds of a breakout, with initial upside targets at $6,945 and the upper Bollinger Band at $6,989.2.

This technical improvement is backed by strengthening momentum indicators. The Stochastic Oscillator (%K=65, %D=51) shows the %K line holding firmly above the %D one, forming a bullish crossover. With both of them being well within neutral territory, the rally has room to extend. Adding further credibility, the positive reading on the Chaikin Oscillator suggests accumulation is underway, with buying volume consistently outweighing selling pressure. 

Fundamentally, the rally is being nurtured by a temporary thaw in US trade rhetoric toward Europe. This lull has given investors the green light to return to buying, particularly in sectors exposed to global trading. Although underlying tensions persist, notably around potential American actions to weaken the greenback, the immediate focus has shifted to the blockbuster week ahead. Lofty expectations surrounding the upcoming Magnificent Seven earnings reports and the Federal Reserve's policy decision are underpinning risk appetite, especially within the heavyweight technology sector.

Yet, the advance remains on a fragile leash, restrained by unresolved geopolitical flashpoints in Eastern Europe and the Middle East. Any escalation in these regions could swiftly unravel the market's shaky confidence, potentially triggering a renewed downturn.

Consider the trading plan down below:

Buy SPX near $6,902. Place Take profit 1 at $6,945 and Take profit 2 at $6,970. Set Stop loss at $6,840.

This forecast holds true from January 26 till February 2, 2026.