Episode 286: All American

In this week's episode David and Ian discuss the move to the downside in Bitcoin and other crypto assets, the poor performance from mega cap names and software, the strength out of industrials, financials, small caps and mid caps. They also talk about market breadth, precious metals and materials, potential false breakdowns, and risk on and risk off behavior.

Transcript

david_1_02-06-2026_111726 0:48

Welcome back to the Weekly Trend Podcast. Today is Friday, February 6th, 2026 s and p 500 hundred, currently sitting at 68 99. I'm David Zarling. I'm here with Ian McMillan. I think we got plenty to talk about this week.

ian_1_02-06-2026_121727 1:03

Lot of, of ups and downs. Some, downs bigger than others. I guess some ups bigger than others has to be, right? If you have multiple ups, some have to be bigger than the others.

david_1_02-06-2026_111726 1:16

Yeah, market's doing what it does best is move.

ian_1_02-06-2026_121727 1:20

which up and or down you think we should talk about first?

david_1_02-06-2026_111726 1:24

Ooh. I think, man, that is tough because,

ian_1_02-06-2026_121727 1:29

I think I see. For me it's not though

david_1_02-06-2026_111726 1:32

okay, then you start,

ian_1_02-06-2026_121727 1:34

There's only one logical answer

david_1_02-06-2026_111726 1:37

there's only correct opinions.

ian_1_02-06-2026_121727 1:39

and the, and the correct opinion is Bitcoin.

david_1_02-06-2026_111726 1:43

Yeah, I.

ian_1_02-06-2026_121727 1:44

You gotta

david_1_02-06-2026_111726 1:44

them behind.

ian_1_02-06-2026_121727 1:45

Bitcoin first.

david_1_02-06-2026_111726 1:46

Take them behind the,

ian_1_02-06-2026_121727 1:47

everyone tunes in.

david_1_02-06-2026_111726 1:48

yeah, that's why they're, that's why they click subscribe and follow and listen.

ian_1_02-06-2026_121727 1:54

Tough week. Tough week for the crypto community. Now I hear I'm not, I'm not super involved in the crypto community. But I hear that right,'cause we hear about like. Bitcoin and Ethereum, and so Ona like the bigger market cap but I think like the I wouldn't call'em meme. What's in between like a meme coin and a Bitcoin. Is there a, a mid cap, I guess like a mid cap?

david_1_02-06-2026_111726 2:29

Mid cap.

ian_1_02-06-2026_121727 2:30

Mid cap. Cryptos, I think they got hit pretty hard. Bitcoin is still, so we got down to 60 last night, overnight or at some point this morning.

david_1_02-06-2026_111726 2:45

Yeah. We hit, we hit a low on Bitcoin of 59,930.

ian_1_02-06-2026_121727 2:51

okay, we're back up to 70.

david_1_02-06-2026_111726 2:55

70,000, so a little bit of beta.

ian_1_02-06-2026_121727 2:57

1230 Eastern Standard Time ride off the 2021 highs. 2021. Yeah. Twice We got up there, we got up to like 63, 64 early 2021 and then late 2021. I traded it back down into 16 thousands I would say the 2022 Bear Market. And we're back.

david_1_02-06-2026_111726 3:29

What's interesting is the, the, the bounce that we're seeing currently, it it to to be determined whether this has any legs gotta see follow through like today's a start, but where we're seeing price response, interaction between supply and demand is this volume weighted average price from the November, 2020 to. Low in Bitcoin. Isn't that funny how that works?

ian_1_02-06-2026_121727 3:55

Hmm. It is,

david_1_02-06-2026_111726 3:57

And guess not all that surprising really? And experienced a 50% drawdown in Bitcoin. And you mentioned the meme coins. A lot of those even worse, you know, if there was a mid cap. Some of that's interesting and there's a lot of narratives around the whole thing. You know, we talked to Epstein files how many months ago, you know, there seems to be something going on with finance

ian_1_02-06-2026_121727 4:23

I believe it was, let me go check to

david_1_02-06-2026_111726 4:26

don't.

ian_1_02-06-2026_121727 4:27

this. It was Lewis Sykes had a good post the crypto market cap, excluding the top 10 cryptos pretty nasty breakdown. I would like to see, it'd be nice if we get a bounce. Right, because that's kind of, in an uptrend. Bitcoin's not, but equities are, I feel like you're kind of, you're kind of on failed breakdown alert.'cause that's been, that's kind of been the mo for the last, I don't know, 23, 24, 25.

david_1_02-06-2026_111726 5:01

You are saying that like if, if Bitcoin as an example gets above 77,000

ian_1_02-06-2026_121727 5:05

Yeah, but even in, yeah, in stocks too.

david_1_02-06-2026_111726 5:08

Oh,

ian_1_02-06-2026_121727 5:09

some

david_1_02-06-2026_111726 5:09

got it.

ian_1_02-06-2026_121727 5:09

move in stocks this week that actually could set up for failed breakdowns. Unless say repairing the charts is super easy, but could happen.

david_1_02-06-2026_111726 5:21

Yeah, and I, I think there's something there from a standpoint of, from false moves come fast, moves in the opposite direction. So if some of these breakdowns that took place in the beginning of the week reverse, uh, it could cause. Or rip your face off, which is interesting to consider heading into the second week of February, February being one of the worst seasonal months that if we're gonna

ian_1_02-06-2026_121727 5:46

especially around mid-February, right? I think it was Dietrich had someone had a charter this

david_1_02-06-2026_111726 5:51

Ryan Dietrich. Yeah.

ian_1_02-06-2026_121727 5:52

Yeah. February mid-February is supposed to get a little weird.

david_1_02-06-2026_111726 5:57

And so, yeah, I, I think starting with, with Bitcoin's appropriate it is interesting to see how quickly they sold it this past week, but we are getting a bounce today. Now again, all it is, is a potential for reversal. You have to have follow through. What does that mean? Well, over the weekend, since it trades 24 hours, we have to see follow through in that. And I would say you're not outta the woods on Bitcoin until you're above 77,000.

ian_1_02-06-2026_121727 6:25

Yeah, it has a lot of work. I mean that now you get right, you gotta 200 data trolling over. So now you're just in, well, anything positive that happens is a countertrend move. That's where, well, that's where my mind goes.

david_1_02-06-2026_111726 6:39

Yep. It's a good, good.

ian_1_02-06-2026_121727 6:42

also, could see us you take the October 10th highs. And the January, mid-January, January 14th, 14 ish, January 15 ish. Highs I mean, we're in another period where we could, I think, go sideways for the rest of Q1 and Q2 and then another leg down you'd still be in trend

david_1_02-06-2026_111726 7:10

In, in the downward rate of trend.

ian_1_02-06-2026_121727 7:12

and the downward rate of trend. Yep.

david_1_02-06-2026_111726 7:14

Yep. And, and if it is a bear market in Bitcoin, and I would define that, I get to define that'cause we're the ones talking on this show, believe it or not, a pro a protracted. So a longer duration correction, taking multiple months, maybe in years to resolve your point is. You could see price move all the way back up into the 80,000 range and roll back over, and that would be actually pretty normal for bear market behavior, right? Because your counter trend moves in a bear market are pretty aggressive.

ian_1_02-06-2026_121727 7:50

I mean, yeah, you 2022, you had a I could argue all, I mean, January through May was one big consolidation.

david_1_02-06-2026_111726 8:00

Yep.

ian_1_02-06-2026_121727 8:00

another leg lower, another 55% lower.

david_1_02-06-2026_111726 8:05

So definitely some damage done in crypto land. Uh, today might be the start of something. We'll have to see. Time will tell on that one. And then since we're on the topic of downward price discovery software as a sub industry, just getting smoked using IGV.

ian_1_02-06-2026_121727 8:26

Mm. Yeah, a lot of I've seen a lot of charts shown the software to Bitcoin correlations.

david_1_02-06-2026_111726 8:32

Well, and

ian_1_02-06-2026_121727 8:33

interesting.

david_1_02-06-2026_111726 8:34

Bitcoin's at a 50% correction IG vs. In using for software minus 32%. And I think that's where it's interesting, right?'cause we're, I mean, s and p, it's the difference between a stock market and market of stocks, right? S and p is currently sitting 1.2% away from highs, but there's been some. On the risk spectrum, risk on areas such as Bitcoin and software that have just gotten smoked. And I think that's impacted sentiment, right? If, if, if a lot of the people in the boat were sitting in the row that was software and crypto, you've had your butt handed to you,

ian_1_02-06-2026_121727 9:13

Yeah.

david_1_02-06-2026_111726 9:15

but yet on the flip side. We have some international strength. We've got industrials. We've got financials. Even regional banks, can you believe it? Regional banks.

ian_1_02-06-2026_121727 9:24

I know, but regionals are,

david_1_02-06-2026_111726 9:27

You're not letting'em out. You're not letting'em off, off the hook yet.

ian_1_02-06-2026_121727 9:31

they look good over the intermediate term. Now, if we can get out of this big relative base. I mean, they're trying though. They're trying. I mean, they they look good. I'm just so skeptical. But small caps doing well, big banks doing well. Yeah, you mentioned industrials. Very hot.

david_1_02-06-2026_111726 9:52

A lot of it.

ian_1_02-06-2026_121727 9:54

On chart XLI versus S and P. Wouldn't that be something.

david_1_02-06-2026_111726 9:59

That is breaking a downward rate of trend that's existed since 2018. It's above price, relative price levels versus s and p that has existed since July of 2023. So the relative strength out of industrials is definitely here, and you look at. More specialized ETFs in the industrial space, like Pave, PAVE, air American Renaissance, or A IRR, or Rho RSHO, which are really focused on, you know, these American industrial names. I, I think a theme here is middle.

ian_1_02-06-2026_121727 10:37

industrial names are coming back.

david_1_02-06-2026_111726 10:39

Yeah. Is it,

ian_1_02-06-2026_121727 10:40

buy a bald eagle.

david_1_02-06-2026_111726 10:41

is it, yeah. Is it,

ian_1_02-06-2026_121727 10:42

Didn't

david_1_02-06-2026_111726 10:43

should.

ian_1_02-06-2026_121727 10:43

illegal. You can't own a bald eagle can. You

david_1_02-06-2026_111726 10:46

I don't know.

ian_1_02-06-2026_121727 10:47

could get a bald eagle, statues,

david_1_02-06-2026_111726 10:50

Yeah, I do.

ian_1_02-06-2026_121727 10:51

bald eagle statues. Put'em out out front.

david_1_02-06-2026_111726 10:55

Yep. I mean, and, and it's a story of the, of the Middle Coast industrials, you know, and I know there's industrials like in Charlotte and

ian_1_02-06-2026_121727 11:05

No,

david_1_02-06-2026_111726 11:05

some, some of the, some of the coasts, you know, but. Really you think of software as being coast, specifically West Coast. Now you're seeing strength out of industrials Middle Coast. Not that regions have to play a a thing in this, but that industrials versus software,

ian_1_02-06-2026_121727 11:23

It.

david_1_02-06-2026_111726 11:24

it is what it is when you see Caterpillar versus the s and p go out to 45 year highs, and Powell Industries versus s and p go out at 45 year highs. I. You know it.'cause there was some con, we, I think you used the word somber last week. There were some things brought up some weakness and we saw that this week. But I don't know that you're gonna get a major market correction if industrials are doing this or if regional banks are doing this. I mean, it stinks if you, if you were overly allocated to software, it absolutely stinks. You know, there, there's, or fangs. Your FANG stocks not great.

ian_1_02-06-2026_121727 12:02

Growth. Growth terrible. And that ha, that's not just this past two week thing. You mentioned fangs. How bad did the mega caps look? I'm sure they're bouncing today, but you know, Microsoft, Amazon got hit today, you said? Yeah, Amazon, I mean, the Amazon now officially below it's absolute 200 day, so you can forget about a relative 200 day. We're below an absolute 200 day relative chart back to where we were October, 2023. Google, which was the, I mean, really the lone thing

david_1_02-06-2026_111726 12:39

Yeah, that

ian_1_02-06-2026_121727 12:39

there.

david_1_02-06-2026_111726 12:40

that was the lone wolf of the mega mega cap. Gross names. Not, not, not that's anything wrong with Google. Currently it's just moved sideways this week and didn't have a great earnings reaction and, but man, I mean for something like f and b, to go from a freaking nothing burger to freaking something, burger Regional Banks, and we still have materials and energy.

ian_1_02-06-2026_121727 13:05

Materials, and I don't, materials have stayed up really well in that, clearly right where that has been, even through all the precious metal weakness,

david_1_02-06-2026_111726 13:19

Yep.

ian_1_02-06-2026_121727 13:20

which I find really,

david_1_02-06-2026_111726 13:22

Isn't that interesting?

ian_1_02-06-2026_121727 13:23

yeah. Well, and so, I mean. Materials really when you look at like an XLB, very little exposure. I mean it has had a good November, December, January, it has outperformed, but not nearly to the extent that precious metals has. And so you hear on the flip side, precious metals, the minor sell off. It's a tough one to get on and I would put, I mean, I kind of put industrials in that category too. It's a tough, I mean, this is, these are not clean entries on an absolute basis.

david_1_02-06-2026_111726 13:59

Well, and I think, I think your point is, is just when you look underneath the hood of something like an XLI or an XLB, so like looking at materials. Metals and mining is about 21% of XLB chemicals is about,

ian_1_02-06-2026_121727 14:12

That's more than I would've guessed.

david_1_02-06-2026_111726 14:14

chemicals is about 50%.

ian_1_02-06-2026_121727 14:16

Yeah, that's what we need are DuPonts.

david_1_02-06-2026_111726 14:18

Speaking of DuPont, we got fresh all time highs.

ian_1_02-06-2026_121727 14:22

I mean, that can't be terrible

david_1_02-06-2026_111726 14:24

I mean that's, we haven't, that's higher than it was in January of 2018.

ian_1_02-06-2026_121727 14:28

I think it's kind. Yeah, I think it's kind of one of those things where if you believe equities go higher, if you think the s and p goes higher, you know, I don't, I don't I don't necessarily support, you know, just buying and closing your eyes, but it's kind of one of those. Situations, of course I would prefer a little bit of consolidation, but sometimes you don't get that Dave.

david_1_02-06-2026_111726 14:54

No. Well, I I think it's interesting, you know, you, you've brought up on, on this podcast numerous times, just what does it look like if the mags your mag seven, your FANG stocks struggle. Like, you really have to have participation on the other areas to, to make up that difference.

ian_1_02-06-2026_121727 15:13

Look how good midcaps look.

david_1_02-06-2026_111726 15:14

Yeah, and, and so it's actually currently the thesis is intact that that's happening. That you are seeing the market of stocks underneath the surface of a cap. Weighted s and p actually doing very well. It doesn't make it easy. I mean, when you're, when your megas, when your all Stars are out of the game and the, and and, and the rest of your players are playing well, I mean, that says something I think. And then can you imagine if the All Stars get back in the game? If you, if you see Microsoft Bottom, if you see Nvidia, jump back in as a leader.

ian_1_02-06-2026_121727 15:49

I don't want'em. Leave'em. We found a new toy to play with.

david_1_02-06-2026_111726 15:53

Yeah, we found some differentiation here.

ian_1_02-06-2026_121727 15:55

found new toys, emerging markets and smoke apps. I hope they stick it. I hope our boys stick it. That would be not, I mean, emerging markets, you mentioned foreign at the beginning. New relative heights. So held up really well. I mean, it has had a correction the last week or so. but making new relative or right up there, it's held up very well. I think my chart just updated in the middle of me saying that. But yeah, it looks good. Mid caps, mid caps. Before I say this, I wanna look now the other one is Dow, so MDY and the Dao pretty clean.

david_1_02-06-2026_111726 16:36

Yeah, and I think that speaks to breadth too. You know, we had the NYSC advanced decline line close at new all time highs. While mega cap stocks were getting hurt and software was getting hurt and Bitcoin, and so it just, it it's that differentiation between the stock market, which many people would label as s and p 500 and we're, we're guilty of it. Right? I open the podcast every week talking about the price lever, the s and p 500, but there's, we as technicians part of our adaptive process. We don't just look at the s and p 500, there's. Other things we gotta look at how many workbooks do we cover each week on part of this team? And you look through a lot of stocks and there are some things breath wise, even though, even though bullish percent isn't os, you look at advanced decline line and you look at, you just go through all the charts and industrials, financials, regionals, and you brought up international emerging markets. I mean, Japan making new relative highs. Germany new absolute highs.

ian_1_02-06-2026_121727 17:39

What are you using for, what do you use for Japan?

david_1_02-06-2026_111726 17:42

D-D-D-X-J. I'm using the currency hedged,

ian_1_02-06-2026_121727 17:45

Okay. I mean, straight up Nikkei looks good too,

david_1_02-06-2026_111726 17:50

right?

ian_1_02-06-2026_121727 17:51

right? And so then that's another one where, I mean, that's, that's an actually not a bad consolidation. And that's, I mean, Nikkei, above 54,000, 55,000. And you know, we've been saying that Nikkei gave about 55,000. We say that all the time in the office.

david_1_02-06-2026_111726 18:08

It is not bad.

ian_1_02-06-2026_121727 18:09

I just walk around telling people.

david_1_02-06-2026_111726 18:11

Come home at night, talk to the kids at supper. I see what the Nikkei did today, but I think it's, I mean, again, I, I'm not here saying that there wasn't damage done in crypto land. I mean, Mike Sokari highlighted the Five Sigma move out of Bitcoin. You know, again, this is one of those things that. We talked about it in precious metals. We talked about in the Japanese bond yields, talking about it here in crypto. These are moves that are quote unquote not supposed to happen once, you know, they're only supposed to happen like once every so, so many thousands of years. And I, I really need people to understand that when you look at global weather across the globe, somewhere, there's a once in 100 year event. It's the same with markets. You go across the market somewhere, there's a once in 100 year event that's just fat tails. It's just the distribution characteristic of markets is you get these outsized moves that are quote unquote abnormal. That's what the market normally does. And so I, while I understand the negative sentiment behind software behind crypto and, and maybe those do bear. You know, shriveled fruit months from now where we, we look back and like that was the shot. That was what was telling us that the equity correction is coming. But really even s and p has been resilient. Staying staying above 6,800.

ian_1_02-06-2026_121727 19:39

All right, so people say that there's, oh, this, I mean, what were some of the numbers they were throwing out for silver? Big, so you know, oh, 1110 Sigma, 11 Sigma, 69 sigma, whatever. But then, right, it's 30% move in one day.

david_1_02-06-2026_111726 19:58

Right.

ian_1_02-06-2026_121727 19:59

then, then that also happened. happened before. Didn't it happen at some point in the

david_1_02-06-2026_111726 20:05

seventies. Yeah, late seventies.

ian_1_02-06-2026_121727 20:08

so when you're telling me, oh, there was a nine sigma move in silver. This should only happen once every 5,000 years, it just happened twice in 80 years. So maybe it's not like, maybe it's not a Nine Sigma. I don't know. Like I, I struggle with, I don't know, like the

david_1_02-06-2026_111726 20:31

It it,

ian_1_02-06-2026_121727 20:32

it to like an asteroid hitting, I don't know.

david_1_02-06-2026_111726 20:35

right? No, I think your point is extremely valid. It, it goes to looking at data in a vacuum rather than looking at the data set as a whole, which means you have to look at all markets, all environments, and like it, or hate it. You have fat tail events over and over and over in markets. In fact, the, the average,

ian_1_02-06-2026_121727 20:59

could somehow like put together every single asset in the world from micro caps to. Stupid meme like, yeah, you'd see that 30% me happen all the time. It just happened to be in silver

david_1_02-06-2026_111726 21:10

right? Correct. You can have, you can have multiple sigma moves to the upside in silver and to the downside in silver. And let's not act surprised when some asset class or some specific stock has a X sigma move because that's markets are normally abnormal.

ian_1_02-06-2026_121727 21:30

When it happens to the upside, it's not, it's just'cause I'm smart. When it happens to the downside, it's because, oh, this shouldn't have happened in a trillion years.

david_1_02-06-2026_111726 21:40

That's right.

ian_1_02-06-2026_121727 21:41

what I tell people,

david_1_02-06-2026_111726 21:43

That's right.

ian_1_02-06-2026_121727 21:43

people say, well, the upside shouldn't have happened. It should, well, you know what, we're not, we're not talking about that side of the coin.

david_1_02-06-2026_111726 21:49

Right.

ian_1_02-06-2026_121727 21:50

But yeah, no, that's, that's funny.

david_1_02-06-2026_111726 21:52

So we're, we're, we're interesting as humans that we, we should be digesting data, data sets as a whole rather than in a vacuum. It, it's kind of, it's kind of in the same lines of like. If you're not invested the whole time, you're gonna miss the best days in the market. Well, the best days are surrounded by the worst days. That's how the data unfolds. When you look at it, your best days in the market are actually in Downtrends. As an example, we're currently in a downtrend in Bitcoin. One of the best, one of the best days could be today

ian_1_02-06-2026_121727 22:28

that's

david_1_02-06-2026_111726 22:28

for Bitcoin.

ian_1_02-06-2026_121727 22:29

these Countertrend, the Countertrend move has to be on your radar.

david_1_02-06-2026_111726 22:32

Right. So we don't, we don't get to sit here and say, oh, you know, all clear, or any of those things. It's just that's what makes markets hard is they have these fat tail events happens. That's why we use trends. That's why we use trends.

ian_1_02-06-2026_121727 22:48

else cool happen this week? Where are gold and silver at? So they got hit last Friday. I to watch that occur as we recorded the podcast. That was super fun. Sitting there watching

david_1_02-06-2026_111726 23:01

silver's down again this week. Gold is positive this week. I find that interesting.

ian_1_02-06-2026_121727 23:06

Yeah.

david_1_02-06-2026_111726 23:07

Um, you still have gold miners battling their relative levels

ian_1_02-06-2026_121727 23:11

Mm-hmm.

david_1_02-06-2026_111726 23:12

versus the s and p. With parabolic moves, which we all can agree based on the actual data that silver was in, you typically don't get a correction through time. You typically get a correction through price, and that's what we've gotten. But you talk about false breakdowns. When you look at the relationship of gold versus silver, was that a false breakdown in that relationship and now you're gonna see gold outperform? Could be.

ian_1_02-06-2026_121727 23:37

Could be.

david_1_02-06-2026_111726 23:40

Anything else you wanna, anything else you wanna touch base on?

ian_1_02-06-2026_121727 23:43

staples. People always get their panties in a wad. When staples do well,

david_1_02-06-2026_111726 23:48

Yeah, I,

ian_1_02-06-2026_121727 23:49

are

david_1_02-06-2026_111726 23:49

I was like,

ian_1_02-06-2026_121727 23:49

in a wad?

david_1_02-06-2026_111726 23:50

no.'cause I, no, Nope.

ian_1_02-06-2026_121727 23:53

don't get it.

david_1_02-06-2026_111726 23:54

A,

ian_1_02-06-2026_121727 23:54

upside.

david_1_02-06-2026_111726 23:55

a, a I don't wear panties. B rare. Rarely. Rarely do I let them get in. Rarely do I let them get in a, in a bundle.

ian_1_02-06-2026_121727 24:04

Uncomfortable,

david_1_02-06-2026_111726 24:05

'cause I know what my identity is and it's not the market, it's not money. So, which is my

ian_1_02-06-2026_121727 24:10

it's staples. Staples are outperforming.

david_1_02-06-2026_111726 24:13

Yeah. And what's,

ian_1_02-06-2026_121727 24:14

It's gotta be a red flag.

david_1_02-06-2026_111726 24:16

well, and I, I think, I think there, you, you always should be looking at those relationships, but this goes back to something you've highlighted in the past, which is. If staples are in an absolute downtrend and outperforming, that's when I get my undies in a bundle. Like that's risk off type behavior. But if staples wanna outperform for a bit and are doing well on an absolute basis, like Staples are gonna go out a new weekly closing high this week, if they went outperformed for a little bit, you know, you look at XLP versus S and. We've just gotten back to a 200 day falling, 200 day relative average. I, I, I'm not as concerned about that as I would be if XLP was correcting and moving lower, but outperforming

ian_1_02-06-2026_121727 25:07

Agree. What do you think about energy?

david_1_02-06-2026_111726 25:11

Oh man.

ian_1_02-06-2026_121727 25:12

I kind of also put it in the, I mean, it looks good. Like I, I think that,

david_1_02-06-2026_111726 25:18

ExxonMobil's off to the races.

ian_1_02-06-2026_121727 25:20

I think equipment and services look really good. I mean, you put it in the category of, it's not, it's, I'm not saying it's the easiest clean. Well, if you took like an I, easy. Actually is a pretty clean entry now. I ha I mean, it's a, it's a solid move to get up to this 3 25. It dig, it's a lot of energy to get up there, but I don't know.

david_1_02-06-2026_111726 25:47

Well, and when you look at, when you look at ExxonMobil on a relative basis to the s and p. And I can't remember last time we talked to Elliot Wave. We are technicians after all. And I'm not a big Ian just because can be a little bit subjective, but for the sake of having a thesis, the move off the lows being from November of, of 2020 being. An initial wave, let's call it an impulse, and the move, the corrective move versus the s and p from December of 22 through October of 25. If that was counter trend and we're now actually heading into a wave three, whether it's an A, B, C, or whether it's a three of five, that could be a really accelerated move. Would you really be that surprised if it's an accelerated move based on what ExxonMobil looks like on an absolute basis? I would not. cause ExxonMobil has gone, had gone nowhere for two years, sitting on top of a base that had gone nowhere since 2007. On the, on the flip side of that.

ian_1_02-06-2026_121727 26:56

Hmm.

david_1_02-06-2026_111726 26:56

If it's energy and materials that are leading similar to what you talked about last week, are you a little bit worried about? That's the end of a cycle type behavior where, you know, we're flipping into staples, energy and materials, and that's the last part of the cycle. I, I think when you throw in what industrials are doing, I think, I think a, a major key here is industrials. Industrials do what they're doing is, and, and international. The fact that those are doing what they're doing and you're not seeing, like credit spreads blow out liquidity is, is decent. Now by no means are we outta the woods, but the fact that s and p by itself has been able to sustain 6,800 and these things are happening. And then, I mean, shoot, if we get a positive February, what does that mean for the rest of the year? I.

ian_1_02-06-2026_121727 27:48

Yeah, I think, and I think I, I like industrials because and it's been a few years since I've. I actually looked at this, but Caterpillar, caterpillar going out and doing what it's doing means a lot to me because I feel like it usually peaks, like if you go back, so Caterpillar peaked may of 99, obviously stocks, you know, rolled over or what, like March of the next year. Never made a new high in oh eight. Actually peaked in July of oh seven. Got back up, ended up with a double top same way, 2012 and then I of 2021. peaked six months early on there. Yeah, I think it's. one. That kind of, to me, it's always been one that I keep an eye on, even when industrials aren't outperforming. I just find it interesting that it has kind of, it's like six to 12 months early. And that has, you know, if we get a bear market here, that won't, that won't be the case. Obviously. It could happen. Kind of a decent canary in the coal mine, I guess you could say.

david_1_02-06-2026_111726 29:09

Yeah, for sure. It's at bellwether.

ian_1_02-06-2026_121727 29:11

yeah, hot, hot, hot. Also, another one that I thought looked really good, I was looking at this morning is deer.

david_1_02-06-2026_111726 29:17

Yeah.

ian_1_02-06-2026_121727 29:19

On then ab on an absolute, the relative chart, needs some work, but hey, it is, it is indeed working. in the hours right now so we could see something.

david_1_02-06-2026_111726 29:30

Yeah, I think it's, I think it's really, I think industrials are a key and the scenarios that you work under are, do we continue to see. Weakness out Omegas and software and crypto. And in that environment, do other sectors catch down or do we see further rotation in industrials? Materials, financials, international value? I would also, another thesis out there would be has the courtesy flush. Software and mega has happened and they now start to participate along with those other areas and you see massive breath expansion. How bullish is that? I don't wanna sound like Tom Lee here, but the, the table is set and, and and I, we've used that analogy in the past. You know, you come home oven's on, you smell good food, there's plates on the table, the candles are lit. The table is set that if this was the flush in software and mega and those stabilize and move side, let's just say move sideways and these other areas continue to lead bullish, if they then move higher megas in software and it, you're talking about massive breath expansion.

ian_1_02-06-2026_121727 30:52

Yeah, I agree. And I, I'm, I'm leaning more towards the right now, I don't know, man, the small as the mids they're making, they're really making a strong case for themselves. I. I'm more on the NASDAQ and all, that's all that growthy stuff participates. But like, you know, that meme with the two girls, it's the guy in the middle with the two girls

david_1_02-06-2026_111726 31:19

he, he, he, he's,

ian_1_02-06-2026_121727 31:20

paying attention to the new girl.

david_1_02-06-2026_111726 31:23

yeah.

ian_1_02-06-2026_121727 31:25

So that's how I am right now. The new Girl man is. Small caps.

david_1_02-06-2026_111726 31:30

Smoke.

ian_1_02-06-2026_121727 31:30

faith in the little guys. I think under the surface. One thing, one thing in my orange flag column on that thesis is still financials. And now we have talked about regional banks, financials as a whole, so kind of blah. But maybe we don't need, I mean, you don't, I think that's kind of been an insurance thing.

david_1_02-06-2026_111726 31:58

This is the nicest I've heard you talk about small caps in a Ian.

ian_1_02-06-2026_121727 32:01

I, well, a new approach. Not everyone, not every child can be parented the same way, right Dave?

david_1_02-06-2026_111726 32:08

That's true.

ian_1_02-06-2026_121727 32:09

And so sometimes you gotta rethink your approach. And I'm trying positive reinforcement

david_1_02-06-2026_111726 32:15

Well, and I, I, I think you bring up a good point about IWM small caps. You know, it, it's, it's interesting because on, on one hand you've got the, uh, globally systemic, important banks doing really well. You're starting to see regional banks pick up, and to your point, banks are the largest sub-industry waiting in small caps.

ian_1_02-06-2026_121727 32:42

Yeah, so

david_1_02-06-2026_111726 32:44

You know what, the largest sector waiting in small caps is.

ian_1_02-06-2026_121727 32:47

industrials,

david_1_02-06-2026_111726 32:48

Industrials

ian_1_02-06-2026_121727 32:49

where's and healthcare is third,

david_1_02-06-2026_111726 32:51

healthcare second

ian_1_02-06-2026_121727 32:52

healthcare is second.

david_1_02-06-2026_111726 32:53

and

ian_1_02-06-2026_121727 32:54

are third.

david_1_02-06-2026_111726 32:55

Yep.

ian_1_02-06-2026_121727 32:56

Banks are the largest like sub-industry.

david_1_02-06-2026_111726 32:59

industry and then biotech.

ian_1_02-06-2026_121727 33:01

Okay,

david_1_02-06-2026_111726 33:02

And maybe that was the clue, maybe the fact that biotech did what it did before small caps moved was kind of the, the signal. Now IIBB on an absolute basis struggling at the 1 74 level 1 75 but really nice consolidation into those levels for the past few weeks, you know, since.

ian_1_02-06-2026_121727 33:23

that better than like your like arc Gs, maybe like to see a little bit more aggress. I would like to see ARC G could turn up here. We'll see. Yeah, biotech definitely. Lord knows there are plenty of individual biotech names to choose from, so if that's your thing, have a gander. They do look good. I mean, there's some,

david_1_02-06-2026_111726 33:48

Well, I, you know, European financial's doing just fine.

ian_1_02-06-2026_121727 33:52

and see. Okay. And that's okay. You wanna talk about. Conundrums amazing relative chart. Like you can definitely, like this is an opportunity if you missed the 2025 image, which happened in like one quarter. I mean, we're talking literally mid December, 2024 through AP mid-April. mean, you had five months. And on a relative basis, it is consolidated sideways. So you're really looking at a very clean, smooth entry there on an absolute basis. Yeah. I mean, it's been, I mean, really hasn't had a good con, I mean, yeah, kind of early December broke out of an absolute consolidation, but. But it looks good. Yeah. European financials, and we went through a lot of those individual charts. HSBCs

david_1_02-06-2026_111726 34:54

General Deutsche Bank. Remember when Deutsche Bank was the the dog?

ian_1_02-06-2026_121727 34:59

oh my gosh, yes. I mean, they just used to 20 19, 20 20. Just a pathetic goll. And look at him now. Look at him now. Now who's laughing?

david_1_02-06-2026_111726 35:13

Mm-hmm. So again, you, you know, you brought up European financials looking good. I another one on the, on the scale of evidence that goes towards bullish. You know, Germany highly correlated to the US doing well. Japan currency hedge doing well.

ian_1_02-06-2026_121727 35:31

Do we talk about the Dax?

david_1_02-06-2026_111726 35:33

Yep.

ian_1_02-06-2026_121727 35:34

Not bad Hanging in there.

david_1_02-06-2026_111726 35:35

Mm-hmm. And, and so really the carnage this week was crypto software, and I get it, there's a lot of exposure to people there. And the mags, I should say, the, the, uh, the FANG stocks not great. Otherwise, you look across other things underneath the surface pretty good.

ian_1_02-06-2026_121727 35:54

Pretty good. I actually really like the stacks chart holding up above just 24,500 level.

david_1_02-06-2026_111726 36:01

So we'll see. I mean, you know, the last two weeks could have been a shot across the bowel or was this the, the flush that was needed before moving higher. We need to clear that 6, 9, 9, 9 level on the s and p six or 7,000 to confirm the uptrend need to hold 6,800. I think that's the first line in the sand. We've had interaction between buyers and sellers there on the s and p 500. So far, uh, buyers have defended, sellers haven't been able to regain control there, and those really, that's really where you gotta be looking and still gotta be looking. International financials. Industrials. I mean, it's been a long time since we've given this much glaze to industrials.

ian_1_02-06-2026_121727 36:43

Man, and I mean, think about this. So we are getting, we are getting a bounce today. So let's go with, this is flush. This is the flush. A flush. I mean, right. You, if someone told me this was a flush on the s and p chart, I'd be like, what are you, done two and a half percent. 3%. But no, definitely an under. I totally agree with you know, the average holding individual stocks probably did a lot worse than the s and p this week, especially crypto. So. So this is our reset. So let's look at our winners. even with a 2% bounce today, just a hot, hot, hot mess. We are. We have made, no, I mean, we've barely moved since end of September, early October. Just one big. Messy consolidation, but we talked about MDY, we talked about the Dow. I think that Russell looks really clean. Now you kind of gotta get down to like an hour or two hour chart, but I think that's a really clean set up and hold and bounce off these December 12th highs. So if that's that right. Those who's coming outta this looking super pretty. It is not the nasdaq.

david_1_02-06-2026_111726 38:04

Agreed.

ian_1_02-06-2026_121727 38:05

The NASDAQ won't be able to prove anything for, I mean, you've got, it's gonna take, I assume now this doesn't have, this could take a week or two for a few weeks for the Nasdaq to even get back near. It's all time highs. Meanwhile, these other guys, these other indices are, I mean, they're set up, their beds are made, they're ready to go. They're dressed for the day.

david_1_02-06-2026_111726 38:28

Yep, that's a good point. And you wonder, and you wonder how many money managers and financial advisors out there are just tilted so heavy towards the megas. And not able to part, you know, not able to shift and, and participate in this, in these other area areas of strength. It's gonna be interesting.

ian_1_02-06-2026_121727 38:46

Well, once they're running the headlines. On value. They'll probably like, maybe like I'm sure the economist will come up with a magazine on small caps and we'll have to take a break for a while.

david_1_02-06-2026_111726 38:59

Yeah, like if there's a, like an American Industrial Renaissance Magazine cover.

ian_1_02-06-2026_121727 39:03

Yeah. If we get the shift from Megas back to small caps, I will say, I'll be impressed that we did it without. Dot com style, draw down

david_1_02-06-2026_111726 39:12

Yeah, agreed.

ian_1_02-06-2026_121727 39:14

Yeah, I mean, and really the, I mean, unless it's what we've been doing since, I mean, 2022, maybe we've just been working it off since then. I have to go back and look at some relative chart. But yeah, so for all the, all the crying that. You know, the Nvidia, the Palantir, what the mags have done, right? I mean, you go back to 20 22, 23, 24, that this clearly all the PE ratios. Just in saying that Palantir could be trading at X earnings 400 times earnings, this is no doubt this is gonna end just like 2000. Bravo to the market for being able to navigate all that without three or

david_1_02-06-2026_111726 40:00

Yeah.

ian_1_02-06-2026_121727 40:00

45% draw down.

david_1_02-06-2026_111726 40:02

I mean, that's what we

ian_1_02-06-2026_121727 40:03

if that is what happens.

david_1_02-06-2026_111726 40:04

Correct. If that's what hap I, I, I love that caveat. You always have to be thinking in optionality and, and what are, what are the thesis out there? You know, there the thesis still remains that. Mega caps are the shot across the bow and software and Bitcoin were too, and we've had some wealth destruction and will these other areas catch down? But I, I, I think the, you've highlighted well in this episode, and I hope our listeners caught it, that there's definitely signs here of differentiation and the market remaining healthy despite what's gone on with the All Stars. Olympics have started. Ian?

ian_1_02-06-2026_121727 40:46

Yeah. Have you watched any yet?

david_1_02-06-2026_111726 40:47

I haven't. I haven't. I, I,

ian_1_02-06-2026_121727 40:50

ceremony like the official openings tonight? Right.

david_1_02-06-2026_111726 40:53

correct.

ian_1_02-06-2026_121727 40:54

Okay.

david_1_02-06-2026_111726 40:55

And I know they have pre-event, I know they have events before the official start.

ian_1_02-06-2026_121727 40:58

curling's been

david_1_02-06-2026_111726 40:59

I haven't watched that. I think it's incredible to me that a downhill skier like Lindsay Vaughn's gonna ski.

ian_1_02-06-2026_121727 41:08

Incredible. Almost unbelievable.

david_1_02-06-2026_111726 41:10

Almost unbelievable

ian_1_02-06-2026_121727 41:12

Almost unbelievable.

david_1_02-06-2026_111726 41:13

with, without an ACL.

ian_1_02-06-2026_121727 41:15

And I'm not, I'm not,

david_1_02-06-2026_111726 41:17

We could leave it there.

ian_1_02-06-2026_121727 41:19

I don't know, man, a conspiracy theorist or. Batting so well lately,

david_1_02-06-2026_111726 41:23

Well, I know, I was just gonna say, like, I, I think that the ACL thing there.

ian_1_02-06-2026_121727 41:28

an A CLA week. I mean, people say it's amazing when people come back and like eight months from an ACL. How long did it take

david_1_02-06-2026_111726 41:37

Ava. Ava took nine months. Nine months, and I thought that was incredible.

ian_1_02-06-2026_121727 41:42

and she's running, kicking a ball.

david_1_02-06-2026_111726 41:44

Yeah, she's playing soccer, right?

ian_1_02-06-2026_121727 41:46

Impressive,

david_1_02-06-2026_111726 41:47

it's not the same direct,

ian_1_02-06-2026_121727 41:48

a downhill slalom.

david_1_02-06-2026_111726 41:50

it's not like a downhill slalom, but I do love me some Super GI love downhill skiing. Uh, love the bob sled. Love the speed skating. Maybe we'll see that Turkish guy. Maybe he's gonna be out there shooting. I don't know if he does. I don't know if that's a winter one for him. Um, but I, I do like me some Winter Olympics hockey. I think hockey's already started.

ian_1_02-06-2026_121727 42:12

I think it has as well. We also have a classic going on. I did watch

david_1_02-06-2026_111726 42:18

Oh, really?

ian_1_02-06-2026_121727 42:19

Yeah,

david_1_02-06-2026_111726 42:21

I.

ian_1_02-06-2026_121727 42:21

we have curling. Some figure skating has happened. Some ice hockey has happened.

david_1_02-06-2026_111726 42:27

And I tell you what the, the, the guys and gals have a tremendous respect for is the, you know, the, the biathlon where they're cross country skiing and then they have to stop and shoot. That's always ridiculous to me, right? My,

ian_1_02-06-2026_121727 42:41

Yes. When they're

david_1_02-06-2026_111726 42:42

my heart's pounding 150 beats a minute, and I'm supposed to hold this gun still.

ian_1_02-06-2026_121727 42:46

Yeah. No,

david_1_02-06-2026_111726 42:47

you kidding me?

ian_1_02-06-2026_121727 42:48

that We've got ski jumping and luge today, luge after the market.

david_1_02-06-2026_111726 42:53

Okay. Hopefully no luge for the market. Just luge for the Olympics.

ian_1_02-06-2026_121727 42:57

skiing. A lot of figure skating, which you know, whatever,

david_1_02-06-2026_111726 43:02

My mom loves that, so I'll respect it, but I, I, I'm not a big figure skating guy.

ian_1_02-06-2026_121727 43:07

freestyle skiing, cross country skiing, more luge, a lot of, a lot of curling. They're knocking out we're gonna have a curling champion here in the first weeks or maybe curling, takes a long time. Speed skating speed skating's up there for me.

david_1_02-06-2026_111726 43:22

Do enjoy it.

ian_1_02-06-2026_121727 43:24

Snowboard.

david_1_02-06-2026_111726 43:25

I like some halfpipe.

ian_1_02-06-2026_121727 43:27

Yeah.

david_1_02-06-2026_111726 43:27

that. I don't know what they call it.

ian_1_02-06-2026_121727 43:29

Eli likes snowboarding, right?

david_1_02-06-2026_111726 43:30

Oh yeah.

ian_1_02-06-2026_121727 43:31

Yeah. So he'll, that's let him know Sunday. Sunday is this big snowboarding day on tv.

david_1_02-06-2026_111726 43:38

So watch snowboarding and then watch the Super Bowl you got, you gotta pick for the big game this weekend.

ian_1_02-06-2026_121727 43:43

Let's hop in Seahawks.

david_1_02-06-2026_111726 43:45

Okay.

ian_1_02-06-2026_121727 43:46

I am hoping Seahawks, man. I do agree. Like I've seen some chatter on it. Is this not one of the like least hyped Super Bowls in years? No one cares about this Super Bowl.

david_1_02-06-2026_111726 43:57

I, I would agree with that. And I, I feel like a lot of people are gonna turn, turn off the halftime show.

ian_1_02-06-2026_121727 44:02

they will. Our family

david_1_02-06-2026_111726 44:04

Same. And, and the fact that Tom Brady can't pick his own team, I feel like he owes a David Ortiz. The Patriots lose.

ian_1_02-06-2026_121727 44:13

Yeah. Yeah,

david_1_02-06-2026_111726 44:16

Yeah, I wouldn't mind if the Hawks win. I guess that's, I guess that's who I'll be sure for.

ian_1_02-06-2026_121727 44:19

that'd be cool. I'd like to see Sam drawing. Got it. Or get it. A couple Gamecocks on Seahawks. So, yeah, I like to see, I like to see Seahawks win.

david_1_02-06-2026_111726 44:30

Sweet

ian_1_02-06-2026_121727 44:32

Miami?

david_1_02-06-2026_111726 44:33

sounds right.

ian_1_02-06-2026_121727 44:34

It's always Miami or Phoenix.

david_1_02-06-2026_111726 44:38

If only I had,

ian_1_02-06-2026_121727 44:39

I guess. Sometimes. New Orleans.

david_1_02-06-2026_111726 44:40

only I had a device

ian_1_02-06-2026_121727 44:44

I know.

david_1_02-06-2026_111726 44:45

that could tell me

ian_1_02-06-2026_121727 44:47

See, that's, I

david_1_02-06-2026_111726 44:47

Santa,

ian_1_02-06-2026_121727 44:48

where it's at. 30.

david_1_02-06-2026_111726 44:49

Santa, Clara, California,

ian_1_02-06-2026_121727 44:50

Oh, it's in ca, California. See, there you go. My 10-year-old self would be so ashamed.

david_1_02-06-2026_111726 44:56

those software execs are gonna have to sell their tickets. Put their stocks down like this.

ian_1_02-06-2026_121727 45:01

Maybe shouldn't have spent all that money on commercials.

david_1_02-06-2026_111726 45:04

Yeah, maybe. But before we sign off, Ian, I better highlight the support of this podcast, the Adaptive Select ETF, listed on the New York Stock Exchange under ticker A DPV, which helps investors access to the most prevalent factors in markets, momentum and relative strength using proprietary identification methods. The adaptive Select ETF attempts to own the strongest 25 large cap stocks. When the market is in an uptrend, and since not all market environments are the same, adaptive select seeks to prevent extended declines by moving short-term treasury bills and cash during long-term market. Downtrends investors can find out more including how to invest in A DPV by visiting ad pv etf.com or calling 1-833-880-FIVE 200. Investing involves risk, including possible loss of principal AD pvs, distributor by Quasar distributors LLC. Anything else you wanna touch base on before I ask our listeners to share us with their friends and family and give us a high ranking on their platform or choice?

ian_1_02-06-2026_121727 46:01

I don't buy a DPV.

david_1_02-06-2026_111726 46:04

Nice.

ian_1_02-06-2026_121727 46:04

maybe there'll be an A DPV Super Bowl commercial.

david_1_02-06-2026_111726 46:07

Wouldn't that be great?

ian_1_02-06-2026_121727 46:08

We can make it like super conservative and right wing bald eagles, American flags. George Washington AI video.

david_1_02-06-2026_111726 46:18

Apple pie, Chevrolets, American industrial Renaissance.

ian_1_02-06-2026_121727 46:23

Chevrolets big engines.

david_1_02-06-2026_111726 46:25

Love it. Well, you know, I appreciate you doing this again with me this week. We hope everybody listening to this has a, has a wonderful time, uh, this weekend with the Olympics and the Super Bowl. Thanks for listening.

ian_1_02-06-2026_121727 46:35

Have a great weekend everyone.