First Week of January 2026 & Operation Absolute Resolve

The first week of January 2026 was supposed to be about economic data and Fed expectations. Instead, history had other plans.

After a generally positive start to the trading year, markets were jolted over the weekend by the stunning news of Operation Absolute Resolve—the capture of Venezuelan President Maduro by U.S. special forces. As we head into the first full trading week of the year, investors are facing a complex cocktail of geopolitical shockwaves, critical labor market data, and an ongoing sector rotation away from mega-cap tech.

At Stonki, our AI investment advisor platform is designed to help you navigate exactly this kind of volatility. While we provide non-discretionary advice—meaning we analyze the data and recommend the plan, but you execute the trades in your own brokerage account—having an AI co-pilot to monitor risk and opportunities is invaluable during market-moving events.

Here is your comprehensive market outlook and options trading strategies guide for the week ahead.

The Venezuela Shock: Geopolitics Takes Center Stage

The capture of Maduro and the subsequent announcement that the U.S. will leverage Venezuelan oil reserves is a massive geopolitical development. For traders, this creates immediate volatility in specific sectors.

1. Energy Sector Volatility (XLE, USO)

Venezuela holds the world's largest proven oil reserves. While the long-term implication of U.S. involvement could mean increased supply (bearish for oil prices), the immediate reaction is often fear and uncertainty.

• The Trade Setup: Expect an initial spike in oil prices due to the "risk premium" of instability, followed potentially by a reversal as the market digests the long-term supply implications. This aligns with the "buy the rumor, sell the news" dynamic.
• AI Options Advice: Watch for elevated premiums in energy options. Selling options for income (like credit spreads) might be viable if implied volatility (IV) spikes unreasonably high and you have a neutral-to-bearish outlook on oil prices stabilizing.

2. Defense & Aerospace (ITA, LMT, RTX)

Successful military operations often bolster sentiment in the defense sector. Companies like Lockheed Martin (LMT), RTX Corp (RTX), and Northrop Grumman (NOC) may see inflows as global tensions rise and U.S. military capabilities are highlighted.

Economic Calendar: The Fed is Watching

While the headlines are dominated by Venezuela, the underlying engine of the market—the economy—faces a critical test this week. The Federal Reserve's rate cut path for 2026 depends heavily on the data dropping in the next few days.

• Wednesday, Jan 7: ISM Services PMI & JOLTs Job Openings.
• Friday, Jan 9: The Non-Farm Payrolls (NFP) report.

Why it matters: Analysts forecast 57K new jobs and a 4.5% unemployment rate. A "hot" number could delay rate cuts, hurting equities. A "cold" number supports rate cuts but raises recession fears. This binary outcome is why options risk management is critical this week.

Major Theme: The Great Sector Rotation

Entering 2026, we are seeing a distinct shift in capital flow. The "easy money" in overextended AI and tech stocks is rotating into undervalued sectors.

• Tech (XLK) to Value: Money is moving from Nvidia (NVDA) and Apple (AAPL) into Financials (XLF), Industrials (XLI), and Utilities (XLU).
• The Logic: Investors believe these sectors will benefit more from anticipated rate cuts and infrastructure spending than tech stocks, which are currently trading at stretched valuations.
• Exceptions: AI Infrastructure. While software AI faces pressure, physical infrastructure (data centers, cooling, power) remains strong. Watch Vertiv and similar plays.

Actionable Options Strategies for This Week

Given the high event risk (Geopolitics + NFP), Stonki recommends focusing on defined risk options strategies and volatility management. Here is how to apply AI-powered options analysis to current conditions:

1. The Income Play: Covered Calls on Rotation Beneficiaries

With sectors like Financials and Utilities gaining momentum, an income-focused options strategy is attractive.

• Strategy: The Covered Call.
• Concept: If you own 100 shares of an ETF like XLF or a stable industrial stock, selling OTM (Out of the Money) calls allows you to collect premium while the stock grinds higher.
• AI Insight: Stonki helps analyze options Greeks (specifically Delta and Theta) to recommend strike prices that balance income generation with capital appreciation potential.

2. The Volatility Play: Iron Condors

If you believe the Venezuela news will cause a momentary spike in volatility (Vega) that will crush back down once the market realizes the conflict is contained:

• Strategy: Iron Condor on the S&P 500 (SPY).
• Concept: You sell an OTM call spread and an OTM put spread. You profit if the market stays within a specific range.
• Why now? High implied volatility makes option premiums expensive. Selling them allows you to benefit from theta decay strategies (time decay) and volatility crush.

3. Hedging Downside: Vertical Put Spreads

If you are worried about the NFP report disappointing or geopolitical escalation:

• Strategy: Vertical Put Spreads (Debit Spreads).
• Concept: Buy a put, and sell a lower strike put to offset the cost. This provides downside protection for a fraction of the cost of buying a naked put.

How Stonki Helps You Navigate Uncertainty

In a week this complex, relying on gut feeling is dangerous. Stonki operates as your SEC Registered Investment Advisor, providing personalized trading plans tailored to your risk tolerance.

What Stonki Does:

• Analyzes Market Conditions: Our AI processes macroeconomic data, options flow, and technical setups to provide clear AI investment recommendations.
• Monitors Your Portfolio: We keep a watchful eye on your positions (via read-only connection) and send timely alerts if risk levels breach your parameters.
• Educates: We break down complex options Greeks and strategies like the wheel strategy or credit spreads so you understand the why behind the advice.

What We Don't Do:

• We do not execute trades. You are always in control of your brokerage account.
• We do not hold your funds. We are a pure advisory layer sitting on top of your investing life.

Conclusion: Stay Agile

The start of 2026 is offering a masterclass in market mechanics: a collision of geopolitics, macroeconomics, and sector rotation. Whether you are looking for AI options advice to generate weekly income or seeking to protect your long-term portfolio, this is a week to be precise, not aggressive.

Watch the VIX, keep an eye on oil flows, and pay attention to Friday's jobs number. The opportunities are there for those with a plan.

Disclaimer: Stonki is an SEC Registered Investment Advisor. All investments involve risk, including the loss of principal. This content is for educational purposes and does not constitute a solicitation to buy or sell securities. Past performance is not indicative of future results.

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