The UK Index is taking a breather after an impressive 10% January rally. In fact, London’s blue-chips came within a whisker of November highs earlier this week. Santa may have taken a break in December and cancelled the Santa Rally. But the Old Nick gave plenty of gifts to London traders in the past week.

Market bulls are taking a pause and now is an excellent time to take stock of events. Many traders are using the relative quiet as an opportunity to take hard-earned profits from the market. Hence the 1% pull-back on the UK Index from around 7187 week’s highs.

Is the UK Index going higher or lower in February? Market bears were delighted when they clawed their way down to 6500 (2.5-year lows) just 5 weeks ago. Are the bulls back in control all the way back to 7500 September highs? The nay-sayers would tell you that these levels are miles away. But remember that we were in sub-7000 territory just a week ago. Another couple hundred points in either direction by Valentine’s Day are not out of the question, given the right stimuli.

So, what would be the key drivers? Remember, the index is based on market cap. It rises and falls with the big, heavyweight components. Remember those excellent BP results earlier this week? BP has the second-highest weighing on the UK Index (5.9%), right behind HSBC (6.9%). BP’s strong Q4 results added 5% to the shares and over 20 points to the index. And that’s just one company.

UK Index in general is pretty top-heavy. Over half of the UK Index ‘s weighting is made up by just 13 companies. Mostly banks, energy, pharma, miners and consumer staples. If you are an index trader and you are long UK Index , you really ought to pay attention to these heavyweights. Especially around the time they report quarterly results.

Miners (Glencore, Rio Tinto), Energy (BP, Shell) and Consumer Staples (Unilever, Diageo) already reported recently. A mixed bag, but mostly biased to the positive. If the UK Index rally is to continue, we need to see more of the same bullishness from other UK Index heavyweights. Which brings me to banks.

Next week and the week after, we are getting the big ones. Not just minor trading updates or CEO statements during capital markets days, but full-year results from the Big 4 UK banks. The annual reports mark a big milestone for Lloyds, Barclays, RBS and HSBC. A chance to assess their financial performance and look to the future of UK’s financial sector ahead of Brexit.

Are the banks ready for the transition? Will they beat, meet or miss market profit expectations? Will we hear more on PPI provisions, US fines for mis-selling of toxic securities or the impact of US-China trade war?

RBS will get the ball rolling next Fri, 15 Feb, with Lloyds/HSBC following on Weds, 20 Feb, and Barclays on Thurs, 21 Feb. Which means that traders have less than a week to prepare.

What’s my own preparation like? I am pretty thorough, so I like to study previous reports (Q3 results in late October), read analyst previews from major brokerages (what’s the consensus?), examine the charts for patterns and key support/resistance levels.

Good preparation means trading with confidence. Of course, not every retail investor has the access to the research notes. Or has the time to pour through the numbers. But I’ve done the necessary legwork, so you don’t have to.

I’m always happy to share Accendo’s analysis ahead of Bank results, so feel free to get in touch with me. You can also sign up to our Gold Pass to get our research directly to your inbox.

Accendo’s research team has also written a special in-depth report looking at the recent share price performance from the UK’s Big 4, broker recommendations, and the latest headlines that could impact the shares after the upcoming results.

Whether you trade the UK Index or individual names, Banks’ full-year results are an unmissable event. RBS is reporting right after Valentine’s Day. Will the shares get a lot of love?

Sam Springett, Trader, 8 February 2019