Stocks on a roll. But overbought market, tons of earnings are key hurdles in the week ahead

Published Sat, Jan 14 20238:00 AM ESTUpdated Sat, Jan 14 202310:15 AM EST

Stocks closed out the first full week of trading in 2023 on a high note, building on the strong gains from December: The tech-heavy Nasdaq posted its second consecutive week in the black, up 4%, while the S & P rose 2% and the Dow added more than 1%. The December report on consumer prices Thursday certainly helped. The headline numbers met economists' expectations and showed inflation continues to edge lower. But it was the underlying results, specifically as it relates to shelter costs — the most heavily weighted component of the index — which indicated that a major source of inflation is on the verge of a slowdown. While this view is driving optimism among investors and has helped the major averages get off to a strong start this year, commentary from Federal Reserve officials remains hawkish. And while strong market breadth can help solidify recent gains, we don't recommend chasing the move as we are well into overbought territory as indicated by the S & P Short-Range Oscillator. Also, earnings season is just kicking off, when we'll learn much more about what companies are seeing on the ground. As a reminder, markets will be closed on Monday, Jan. 16 in honor of Martin Luther King Jr. Day. A full list of market holidays is available here . The consumer discretionary sector led to the upside, followed by technology and real estate, while consumer staples led to the downside followed by health care. Meanwhile, the U.S. dollar index pulled back further to around 102. Gold advanced to the low-$1,900s per ounce region. WTI crude prices bounced back to around the $80 per barrel level while the yield on the 10-year Treasury stands at around the 3.5% level. Looking back Within the portfolio, we received earnings results from Wells Fargo (WFC). It was a relatively light week for data. On Thursday, however, the December Consumer Price Index was released and the headline numbers were largely in line with Wall Street's expectations. Still, we saw plenty to be encouraged about under the hood . Also on Thursday, the initial jobless claims for the week ending Jan. 7 came in at 205,000, a decrease of 1,000 from the prior week and below the 215,000 expected. What's ahead Fourth-quarter earnings season is upon us. We will hear from Club holding Morgan Stanley (MS) next week on Tuesday before the opening bell, and from Procter & Gamble (PG) on Thursday before the bell. Here are some other earnings reports and economic numbers to watch in the week ahead: Tuesday, January 17 Before the bell: Citizen's Financial (CFG), Goldman Sachs (GS), Signature Bank (SBNY), Silvergate Capital (SI) After the bell: United Airlines (UAL), Pinnacle Financial (PNFP), Progress Software (PRGS), Interactive Brokers (IBKR) Wednesday, January 18 Before the bell: Charles Schwab (SCHW), JB Hunt (JBHT), PNC Financial (PNC), Prologis (PLD) After the bell: Alcoa (AA), Discover Financial (DFS), First Horizon National (FHN), HB Fuller (FUL), Kinder Morgan (KMI) 8:30 a.m. ET: Producer Price Index 8:30 a.m. ET: Retail Sales 9:15 a.m. ET: Industrial Production & Capacity Utilization Thursday, January 19 Before the bell: Comerica (CMA), Fastenal (FAST), Fifth Third Bancorp (FITB), KeyCorp (KEY), M & T Bank (MTB), Northern Trust (NTRS) After the bell: Bank OZK (OZK), Concentrix (CNCX), Netflix (NFLX), PPG Industries (PPG), SVB Financial (SIVB) 8:30 a.m. ET: Initial Claims 8:30 a.m. ET: Housing Starts Friday, January 20 Before the bell: SLB (SLB), State Street (STT), Regions Financial (RF), Ally Financial (ALLY), Ericsson (ERIC), Huntington Bancshare (HBAN) 10:00 a.m. ET: Existing Home Sales (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

People shop at the Pioneer Supermarkets on January 12, 2023 in the Flatbush neighborhood of Brooklyn borough in New York City.

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The December report on consumer prices Thursday certainly helped. The headline numbers met economists' expectations and showed inflation continues to edge lower. But it was the underlying results, specifically as it relates to shelter costs — the most heavily weighted component of the index — which indicated that a major source of inflation is on the verge of a slowdown.