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The Great Rotation: SmallCaps and Gold Take the Lead · The SPY Trader

• 0:00
  Good morning and welcome to Spy Trader !
• 0:03
  I am your host , Barnaby BullRun Buckley , coming to you live at 5 am on Monday , January 26th , 2026 , out here in the Pacific time zone .
• 0:13
  I have my extralarge coffee in hand and my eyes glued to the monitors so you do not have to be .
• 0:19
  We have a fascinating week ahead of us , and if you have been watching the charts lately , you know the market is doing a bit of a dance .
• 0:27
  As of this morning , the S&P 500 , our favorite SPY , is trading near 6,915 , which is up about one percent for the year .
• 0:36
  The Nasdaq100 is hovering around 23,501 , and the Dow is leading the largecaps at 49,098 .
• 0:45
  But the real story is the smallcap stocks .
• 0:48
  The Russell 2000 is the early leader of 2026 , up about six percent already .
• 0:54
  It has been a bit of a bumpy ride , though We just came off two consecutive losing weeks in midJanuary .
• 1:01
  Why ?
• 1:01
  Well , believe it or not , it was all about Greenland .
• 1:04
  The Greenland Gambit , as they are calling it , caused a geopolitical flareup between the US and Europe over acquisition talks .
• 1:12
  This led to tariff threats that spooked the markets before things started to deescalate recently .
• 1:17
  On the home front , everyone is talking about the One Big Beautiful Bill Act , or the OBBBA , which was signed last July .
• 1:26
  This landmark policy made the 2017 tax cuts permanent and introduced taxfree tips and overtime .
• 1:33
  We are looking at a tax refund windfall of nearly one hundred billion dollars hitting the economy in the coming weeks .
• 1:39
  That is a lot of buying power !
• 1:41
  Now , let's look at the sectors .
• 1:43
  We are seeing a massive rotation .
• 1:46
  Technology , through the XLK ETF , is actually lagging right now .
• 1:51
  Investors are asking if all that AI spending is finally going to pay off .
• 1:56
  Intel , or INTC , recently saw its stock plunge seventeen percent on some soft guidance .
• 2:03
  Meanwhile , Basic Materials under the XLB ticker is up over nine percent this year , driven by a huge surge in gold and metals .
• 2:13
  Energy and Industrials are also showing strength as we build out the physical infrastructure for AI .
• 2:19
  For my analysis today , I want to focus on this Great Rotation .
• 2:24
  We have been so focused on the Magnificent Seven for years , but the market is finally broadening out .
• 2:30
  The Federal Reserve is currently sitting with rates between 3.5 and 3.75 percent , and they are expected to hold steady this week .
• 2:39
  With inflation at 2.7 percent and unemployment at 4.6 , the economy is in a delicate balance .
• 2:46
  We are also right in the middle of earnings season .
• 2:49
  This is a huge week because Microsoft and Apple are both reporting .
• 2:55
  Everyone is watching Microsoft’s Azure AI growth and waiting to see if Apple finally launches those rumored AI smart glasses .
• 3:03
  Even with the tech volatility , Nvidia remains a powerhouse with a four point six trillion dollar market cap .
• 3:10
  So , what should you do with your money this morning ?
• 3:13
  Here are my four big takeaways .
• 3:15
  First , look outside the US .
• 3:18
  For the first time in a long time , international stocks are winning .
• 3:22
  The Vanguard Total International Stock ETF , ticker VXUS , is up five percent this year .
• 3:29
  I recommend looking at the Vanguard FTSE Developed Markets ETF , ticker VEA , or even the iShares Latin America 40 ETF , ticker ILF , which has been particularly strong .
• 3:42
  Second , embrace the smallcaps .
• 3:44
  Those tax cuts on tips and overtime in the OBBBA really help smaller , serviceheavy companies .
• 3:52
  Consider moving some of your core holdings from the SPY into a total market fund like VTI to catch that Russell 2000 momentum .
• 4:00
  Third , stay safe with gold and bonds .
• 4:03
  With gold prices approaching five thousand dollars an ounce , the SPDR Gold Shares , ticker GLD , is a great hedge against Greenlandstyle geopolitical drama .
• 4:13
  For income , the iShares 20 plus Year Treasury Bond ETF , ticker TLT , is yielding near 4.9 percent and looks very attractive .
• 4:24
  Finally , if you want growth , stay selective .
• 4:26
  Keep your Nvidia , but maybe pair it with the Industrial Select Sector SPDR , ticker XLI , to play the physical side of the AI race , like data centers .
• 4:36
  And if you are feeling spicy , keep an eye on the space sector with Rocket Lab , ticker RKLB , which has surged twentyfive percent this year .
• 4:44
  That is all for this morning’s update .
• 4:47
  I will be back in a few hours to see how the opening bell treats us .
• 4:51
  Happy trading !