This week was the first big volatility event of 2026, and it definitely won’t be the last.

Trump threatened Europe with tariffs as part of its push around Greenland, which triggered a market wide selloff. It was the biggest drop since October 10, but it did not last long.

Just two days later, Trump said there would be no tariffs on Europe and no attempt to take Greenland by force. The markets quickly recovered. Although the market still ended the week lower.

This coming week is packed with potential catalysts, both positive and negative. Big tech earnings, FOMC, a possible government shutdown, and new tariff threats involving Canada and Iran.

So expect more volatility.

Even these headlines haven’t derail the markets much.

In fact, the markets have been unusually calm. Both the S&P 500 and the Nasdaq have been consolidating for over 4 months now. Eventually, this compression will resolve one way or another. Long consolidations do not last forever. So far this year, small caps have been outperforming. We will see if the rest of the market follows suit and breaks out. But it is important to stay open-minded and also be ready for scenarios to the downside.

Because a few things seem off. This has been an unusual market in many ways, and we are definitely not living through normal times. But a few things stand out right now:

First of all, here is another look at how dominant small caps have been so far. We have not seen this type of outperformance from small caps in over year. Investors are clearly looking to increase exposure outside of the mega caps.

Second, commodities like gold and silver are going absolutely parabolic. This has been an incredible move. To see how historic it is:

Gold has now stayed above its 200 day moving average for 568 consecutive days. This is the second longest streak since the end of the gold standard. The last time we saw a stretch like this was during the 2008 financial crisis.

This is definitely not normal.

This only the 4th in over 100 years that gold has been strong relative to the S&P 500.

Third, the gap between gold and bitcoin keeps getting bigger. They used to move more together, but not anymore. The market is treating them very differently now.

When investors worry about the economy, rates, or geopolitics, they buy gold. Bitcoin usually goes up when there is a lot of liquidity and people are willing to take more risk. Gold is treated as flight to safety while Bitcoin is simply treated as a high beta risk asset.

That is another sign that something in this market environment is unusual.

Fourth, this year money is going into defensive and value sectors instead, like energy, materials, utilities, and consumer staples, which are the boring, safer parts of the market. This kind of move often happens when investors start to get more careful. But maybe this is simply rotation. Or maybe it is because it is now clear that energy infrastructure is the current bottleneck for the AI trade.

Fifth, let’s look at cash levels. Right now, fund managers are sitting at the lowest cash levels in history. They are essentially fully invested as cash hits record lows. This also means there is not much money left on the sidelines to drive the market higher. Investors still want to stay invested, so instead of selling, they rotate into different sectors.

This upcoming week is packed with earnings reports.

Some of the biggest names reporting are Microsoft, Meta, Tesla, and Apple, as well as many AI infrastructure names like ASML, SanDisk, Celestica, Amphenol, and Lam Research, and many more.

These reports will likely set the tone for the next move in the market. With so many leaders reporting at the same time, we will get a clear read on demand, margins, and guidance. I’ll be watching them closely.

In fact, almost a third of all companies in the S&P 500 are reporting this coming week alone.

Here is a look at the earnings estimates for the Mag 7. Looking at this shows again that Nvidia is on another level. A company growing at this rate at that scale is historic.

Even though most companies are beating earnings so far, their stocks are still underperforming the market, which tells you that good results are already expected and priced in. Investors want even stronger numbers and better guidance. Simply being “good” is not enough anymore.

The next week is full of major catalysts, and there is no shortage of events that could cause volatility. Be prepared to see more swings in the market. While I do think we will likely end the year higher, it will not be a straight line up. I would not be surprised to see a pullback or correction in the first half of the year, which could be a great buying opportunity. Even with all the headlines and upcoming events, it pays to stay optimistic, but cautiously so.