Midweek Market Update 2/4/26
On Track / Dark Pools & Path Ahead
This week’s focus is on navigating volatility and staying grounded in seasonality and historical context rather than short-term bias. We’re seeing markets swing between overextension and mean reversion, making it a favorable environment for fading extremes rather than chasing moves. The key thesis remains defensive positioning — selling rips, respecting risk, and prioritizing capital preservation as the market continues to digest a complex macro backdrop. Index’s held the support levels laid out despite a series of volatility spikes. With Google earnings providing a positive narrative on a continued investment for Semi’s (Market Leader) we took profit on SOXS and SQQQ at an ideal time. But, what comes next? We potentially have an ideal setup looming so lets review the data.
Index Review:
SPY : The uptrend held from November and is rallying overnight currently. My lean is for a test of the 696 level
I still expect the path below to be the most likely scenario going into next week. Will share some trade idea’s later on to take advantage. Continue to follow these levels as I update them, have been a key guide to “staying on track”
QQQ : Finding these important trendlines all over the market, will be key to watch going into rest of the month to see if it holds.
Sector Focus: IGV, XLE, and MAGS
IGV (Software ETF): Started the day weak and then finally saw some strength, with comments from NVDIA CEO supporting Enterprise Software, I think the bounce is all but confirmed. Can take advantage of this with TEAM reporting earnings tomorrow, NOWL which I have been buying daily this week, and ServiceNOW 115C’s for next week. I love the setup short term.
And I’m not the only one
Strong support for software here
Oversold across every metric
XLE (Energy): Has been incredibly strong and remains a top pick this year. Now breaking out of a multi year range, watch for buy the dip opportunities.
MAGS: 62 level has held, as long as that remains true the Magnificent 7 can reinforce the argument for a bounce to come in the index’s into Valentines. The key watch will be how this plays out though.
Still below the #1 print and reinforces the top look shared above
Market Thesis: Volatility as Opportunity
Leverage a VIX dump as an opportunity to
