The Market Doesn’t Break. People Do.
I. Headlines & Catalysts
Yesterday was a textbook rotation day. Momentum stocks were hit hard as traders rushed for the exits, while defensive names quietly took the lead. The Nasdaq broke lower, yet the Dow pushed into fresh all-time highs! That split told the whole story. Risk was not leaving the market, it was just changing seats.
Software led the pain. What started as a greenish open faded fast, and by the afternoon even strong earnings could not stop the selling. The mood shifted from chasing growth to protecting capital.
II. Sector Performance Snapshot
Green on the board belonged to defense.
Real Estate and Energy topped the list, followed by Consumer Defensive, Healthcare, and Financials. Capital rotated toward areas that tend to hold up when uncertainty rises.
On the other side, Technology and Communication Services were deep red. Consumer Cyclicals and Utilities also lagged. “Momentum” was sold. “Safety” was bought.
III. Technical Breadth & Sentiment Check
The short-term Compq signal stayed RED, with price below the 5 and 8 day EMA cross. That alone puts me in no-trade mode.
Breadth was mixed but weakening under the surface. Nasdaq advance decline slipped below its short-term average. McClellan Summation Index below its 10 day signals. Pressure, not panic. Yet.
Volatility remained calm. VIX stayed under 20. Put call ratios were neutral. NAAIM exposure stayed elevated. Waiting for the later today new number. This looks like an orderly reset, not fear.
IV. Earnings & Corporate News
This was a rare session where beats did not matter.
Software and AI-linked names were sold aggressively as investors questioned valuations and future margins. Even strong reports were met with selling. The market is pausing its habit of rewarding big numbers at any price.
AI spending is massive, but so are the costs. That balance is now under scrutiny.
V. Economic Calendar Highlights
Private payroll data from ADP showed just 22,000 new jobs in January, well below expectations. That added another layer of caution.
Today brings Initial Jobless Claims and Productivity data. With shutdown risks still in the background, macro data flow remains fragile.
Earnings stay heavy both before and after the bell, keeping volatility elevated at the single stock level.
Pre-Market: $BMY (Bristol-Myers Squibb), $COP (ConocoPhillips), $SHEL (Shell), $EL (Estée Lauder).
After-Market: $AMZN (Amazon), $MSTR (MicroStrategy), $RBLX (Roblox), $AFRM (Affirm), $RDDT (Reddit), $ARM (Arm Holdings), $TEAM (Atlassian), $ILMN (Illumina), $FTNT (Fortinet).
VI. Interpretation & Outlook
This was a momentum unwind…
Many former leaders will need time. Weeks, not days, to rebuild clean bases and regain trust. Chasing quick reversals here is a low-quality game.
The rotation into defensives suggests investors are still engaged, just more selective. Until breadth improves and momentum stabilizes, patience matters more than prediction.
VII. What I Am Watching and How I Trade It
Market color is RED, so I am not chasing reversals. If any bounce shows up, I treat it as noise unless breadth confirms. My edge comes from tight patterns and low-risk entries, not from guessing bottoms.
Discipline first. Cash is a position. When the market is ready, it will make that clear.
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