Defensive positioning continues to increase while Financials fall further

In this 7-minute video, Mark L. Newton, CMT examines the stock market outlook this week in early February 2026 through the lens of sector rotation, return dispersion, and trend signals across major US indices. He reviews how the S&P 500 (SPX), Invesco S&P 500 Equal Weight ETF, Nasdaq 100 (QQQ), Dow Jones indices, and Russell 2000 are trading near prior highs while underlying volatility at the single-stock level has surged, using measures like S&P 500 absolute return dispersion and the NYSE advance/decline line. Newton also discusses recent technical signals, including clusters of so‑called “Hindenburg Omen” readings, and how these fit within the existing intermediate‑term trend channels for SPX.

The report details the growing divergence between Financials and the broader market, comparing bank-focused ETFs such as KBWB with broker/dealer exposure (IAI) and equal‑weighted Financials (RSPF) versus equal‑weighted S&P 500 (RSP). Newton explores the ongoing rotation toward defensive sectors, highlighting Consumer Staples (XLP, RSPS), Telecom, and Utilities, and contrasts their performance with Consumer Discretionary (RSPD) and various Technology groups, including Software, Semiconductors, and data‑storage names. The video also touches on related moves in interest rates, the US dollar, precious metals, cryptocurrencies, and agricultural commodities, with full charts, indicators, and the author’s market view available to subscribers.

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