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Geopolitical Shock and the Value Rotation · The SPY Trader

• 0:00
  Welcome back to Spy Trader , the only podcast that delivers fresh market insights before your first cup of coffee .
• 0:07
  I'm your host , Candlestick Carl , and it's 5 am on Wednesday , January 21st , 2026 , Pacific time .
• 0:15
  We are diving into a market that just suffered its sharpest shock since last October , but futures are hinting at a nervous bounce .
• 0:22
  Let's get right into the action .
• 0:24
  Yesterday , Tuesday , January 20th , was a rough day on the charts .
• 0:30
  The market took a serious hit , mainly due to escalated geopolitical tensions stemming from new tariff threats aimed at several NATO member states , specifically linked to the dispute over Greenland .
• 0:41
  This created what felt like a ' Sell America' day .
• 0:45
  The S&P 500 fell 2.06% and the Nasdaq Composite , full of Big Tech , took the biggest percentage hit , dropping 2.39% .
• 0:57
  The broad nature of the selloff was evidenced by declines in major names like Nvidia , which dropped 4.4% , and JPMorgan Chase , which lost 3.1% .
• 1:08
  Today , though , futures are signaling a tentative rebound of around 0.3% to 0.4% , suggesting a period of shortterm consolidation might be in play .
• 1:20
  The real story here isn't just the geopolitical risk ; it's the underlying market rotation that continues .
• 1:28
  For 2026 yeartodate , Information Technology is the worst performer , down 0.40% , following the slump after the AI investment boom of 2025 .
• 1:39
  Meanwhile , the rally is broadening out aggressively , with Basic Materials crushing it , up 9.05% YTD , and Industrials also performing strongly .
• 1:51
  This rotation shows the market is broadening its search for value .
• 1:56
  Even during yesterday's market shock , the defensive Consumer Staples sector managed to edge up 0.12% , proving its stability .
• 2:05
  On the macroeconomic front , we have resilience offset by risk .
• 2:10
  Gross Domestic Product showed robust growth at 4.3% in Q3 2025 , but we are battling headwinds : the 10year US Treasury yield has climbed to 4.29% , suggesting persistent high borrowing costs .
• 2:26
  Furthermore , ongoing tariffs mean US companies and consumers are still bearing the brunt of the costs , which is linked to contracting manufacturing activity .
• 2:36
  So , how do we trade this messy market ?
• 2:38
  We focus on the established trend — the shift into cyclical value and defense .
• 2:43
  First , Target Cyclical Strength .
• 2:45
  Industrials are leading the charge , benefiting from strong economic growth .
• 2:50
  Look at the Industrial Select Sector SPDR Fund ( XLI ) to gain broad exposure here .
• 2:57
  Second , Boost Defensive Exposure .
• 3:00
  Given the geopolitical uncertainty , you need stability .
• 3:03
  Consider the Health Care Select Sector SPDR Fund ( XLV ) to stabilize your portfolio .
• 3:10
  Third , Maintain Core Exposure through a widely diversified ETF like the Vanguard Total Stock Market ETF ( VTI ) .
• 3:19
  This captures the full US market , including the small and midcap companies that are currently seeing momentum .
• 3:26
  And finally , when geopolitical risk sends the market tumbling , safehaven assets like gold spike .
• 3:33
  Consider SPDR Gold Shares ( GLD ) to hedge against further risk .
• 3:38
  What to avoid ?
• 3:39
  Given that the 10year yield is high and the tech rally is slowing , I'd be cautious with the highvaluation , ratesensitive growth names like those found in the Invesco QQQ Trust ( QQQ ) until this uncertainty clears up .
• 3:53
  That's all for now , traders .
• 3:56
  Stay nimble , watch those geopolitical headlines closely , and remember : trade smart , not hard !