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The Great Rotation: Gold’s Surge and the SmallCap Rise · The SPY Trader

• 0:00
  Good morning and happy Presidents' Day to all my favorite market watchers !
• 0:04
  I'm your host , Sunny Sideup , and you're listening to Spy Trader .
• 0:08
  It's 5 am on Monday , February 16th , 2026 , out here on the Pacific coast .
• 0:15
  While the floor of the New York Stock Exchange is quiet today for the holiday , the data from last week is screaming for our attention , so pour yourself a big mug of coffee and let's get into what’s moving your money .
• 0:28
  The market enters this holiday break after a period of significant volatility .
• 0:33
  The S&P 500 , which many of you track through the SPY or VOO ETFs , finished the week around 6,836 .
• 0:43
  It’s been a bit of a bumpy ride , with the index down about 1.4 percent last week and basically flat for the year .
• 0:51
  The big concern for the pros right now is valuation .
• 0:56
  The Shiller CAPE ratio has climbed past 39 , a level we really only see during times like the dotcom bubble .
• 1:03
  The real story , however , is the great rotation .
• 1:06
  While the big tech names in the Nasdaq100 , or the QQQ , have been sliding for five straight weeks , the little guys are finally having a moment .
• 1:15
  The Russell 2000 , represented by the IWM ticker , jumped 1.2 percent on Friday and is up over 6 percent for the year so far .
• 1:26
  This tells us that investors are moving out of the giant tech companies and into smaller , domestically focused businesses .
• 1:33
  Speaking of those tech giants , we are seeing a shift in the AI narrative .
• 1:38
  It’s not just about who wins with AI anymore ; now everyone is worried about who loses .
• 1:43
  We call this the AI Disruption panic .
• 1:46
  Last week , the Information Technology sector , or XLK , really struggled .
• 1:53
  Real estate firm CBRE Group plunged 16 percent and Charles Schwab dropped nearly 11 percent because investors are scared that new AI tools and vibe coding might threaten their traditional business models .
• 2:06
  Meanwhile , energy and materials are the new leaders .
• 2:10
  The XLE energy ETF is being buoyed by oil prices jumping 13 percent in a month due to Middle East tensions .
• 2:18
  And if you haven't checked the price of gold lately , hold onto your hat .
• 2:22
  Gold is trading over 5,000 dollars an ounce right now , which you can see reflected in the GLD ETF .
• 2:29
  On the macro side , we got some relief with January inflation coming in at 2.4 percent , the lowest since 2021 .
• 2:37
  But the Federal Reserve is staying cautious , keeping interest rates between 3.5 and 3.75 percent .
• 2:45
  The market was hoping for a rate cut in June , but now it’s looking like July 2026 is the more likely target .
• 2:53
  We also need to watch the labor market , which is cooling off .
• 2:57
  Job growth in 2025 was the weakest we have seen since 2003 , excluding the pandemic years .
• 3:04
  One bright spot for your wallet might be the One Big Beautiful Bill tax refunds .
• 3:09
  Those OBBBA refunds are starting to hit consumer pockets this week , which could give a nice temporary boost to retail and consumer discretionary stocks .
• 3:20
  Looking at specific companies , Amazon is on its longest losing streak since 2006 , falling for nine days in a row .
• 3:28
  Investors are a bit spooked by their 200 billion dollar projected spending plan for 2026 .
• 3:35
  Apple also had a mixed bag ; they reported record revenue of over 143 billion dollars , but the stock still fell 2 percent as people wait for the delayed Apple Intelligence 2.0 upgrades .
• 3:48
  All eyes are now on Nvidia's earnings on February 26th .
• 3:53
  That will be the big finale for this season .
• 3:55
  On the flip side , Rivian surged over 26 percent recently on partnership rumors , showing there is still life in some of those beatendown growth names .
• 4:05
  So , how should we trade this ?
• 4:07
  First , follow the broadening trade .
• 4:10
  I recommend rotating some focus toward smallcap and value stocks .
• 4:15
  You can do this through the Vanguard Total Stock Market ETF , VTI , or the iShares Russell 2000 ETF , IWM .
• 4:25
  These smaller companies are less expensive than the tech giants and will benefit more when the Fed finally does cut rates .
• 4:33
  Second , hedge your bets with hard assets .
• 4:37
  With gold at historic highs and the U.S.
• 4:39
  deficit growing , holding some SPDR Gold Shares , GLD , or the Energy Select Sector ETF , XLE , is a smart way to protect your portfolio against a weakening dollar and geopolitical risks .
• 4:54
  Third , for the longterm thinkers , consider buying the dip in highquality tech .
• 5:01
  The 23 percent drawdown in Amazon and the 30 percent yeartodate drop in Shopify , or SHOP , are starting to look like attractive entry points for the Invesco QQQ Trust .
• 5:12
  While the spending is high now , the underlying earnings growth for the S&P 500 is still healthy .
• 5:18
  Finally , look for stability in fixed income .
• 5:22
  With the labor market cooling , longterm treasuries are becoming a great play .
• 5:28
  I like the iShares 20 plus Year Treasury Bond ETF , or TLT , for both the income and the potential for capital gains when rates eventually move lower .
• 5:39
  That’s it for this early morning update .
• 5:41
  Enjoy your holiday Monday , and I'll see you back here in a few hours for the next update .
• 5:46
  I'm Sunny Sideup , stay savvy out there !