The Weekly Trend
The Weekly Trend
Episode 288: Glass Box
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In this week's episode David and Kevin discuss the S&P 500 continuing to be within a tight range, bearish market sentiment with large amounts of short selling, what would happen if the Magnificent 7 and software begin to participate to the upside, the continued strength internationally, precious metals, continued strength in value sectors, and what could conflict in Iran mean for the market.
Welcome back to the Weekly Trend Podcast. Today is Friday, February, 2020, 26 s and P 500, currently sitting at 6 8 8 5. I'm David Zarling. I'm here with the head of our FBI, Kevin Firari, the Ferrari Bureau of Investigation, covering for Ian McMillan while he is on a field trip with his son. Thanks for joining. Kevin,
fbi_1_02-20-2026_102244:There. You bet.
david_1_02-20-2026_102241:what kind of investigations are you running?
fbi_1_02-20-2026_102244:And not very useful ones generally,
david_1_02-20-2026_102241:Hmm. Investigating the markets. Another podcast week with s and p 500 sitting inside a tight range, still above 6,800 and really, according to bespoke, the tightest range to start a year since 1966.
fbi_1_02-20-2026_102244:Which is pretty crazy to think about. Boat.
david_1_02-20-2026_102241:That's a long time ago.
fbi_1_02-20-2026_102244:Yeah, it is. Well before my time.
david_1_02-20-2026_102241:Mm-hmm.
fbi_1_02-20-2026_102244:Yeah. At this point we might as well just. Not open the market at the beginning of this year. We could have just saved ourselves some time. Went on a nice vacation somewhere warm. But yeah, it's
david_1_02-20-2026_102241:it's, it is kind of crazy. I mean the, we covered this last week too, but the past month s and p has moved 1.8%, but underneath the surface, people didn't want to just go home and have the market close.'cause the average stock is moved around 11 and 11.2%. So that's pretty crazy. Counter baits brought that up, that 98th percentile over the last three decades that you have a. One, 1.8% range and stocks underneath the surface moving 11% up or down. Pretty wild.
fbi_1_02-20-2026_102244:It is wild.
david_1_02-20-2026_102241:What do you wanna touch base on for our listeners this week? Do you wanna start with
fbi_1_02-20-2026_102244:Oh, I don't know. think?
david_1_02-20-2026_102241:I, I think the interesting thing will be if. Software and mega caps start to get going again because you have all these other things already participating. You know, equate s and p, right? There's different s and ps. There's cap weighted, which we talk about a lot. For good reason. It's been the one of the undisputed leaders for the past decade or more, but there's equal weight s and p and there's even like the NYSE and those are have been doing well. I just think it's very interesting that you have this situation with a volatility measurement instrument like the VIX sitting at 20 with a very large short VIX positioning from speculators. So they're betting for volatility to get crushed. Typically that might work in the opposite way. And then you have aa I, I. More bears than bulls. First time since November. It's been a few months.
fbi_1_02-20-2026_102244:Yeah, which is correct.'cause those would be kind of conflicting, I guess signals, if you wanna call it that way, right? A little bit. As far as like sentiment is concerned,
david_1_02-20-2026_102241:Yeah. I, I think, I think a fair way to say it is the market's kind of in a glass box of emotion.
fbi_1_02-20-2026_102244:just picture Will Ferrell and what was that? Anchorman, when he is
david_1_02-20-2026_102241:Yeah.
fbi_1_02-20-2026_102244:in the phone booth.
david_1_02-20-2026_102241:One of the all time classics,
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:because I mean, the fact that you have this tight range in the cap weighted s and p massive movement underneath the surface, and when I say large movement, you have software using IGV falling as far as it has, and hasn't really bounced either. I mean, you're talking about a corrective move, about 30% in software. And when you look at like mega cap still in a range or, but you look at the Megs, megs are down, you know, somewhere around 10%.
fbi_1_02-20-2026_102244:That's.
david_1_02-20-2026_102241:And then you've got retail and hedge funds buying equities. You've got institutions selling equities. Third, third largest outflow since 2008. Now granted, that's 8.3 billion and we're talking about trillion dollar market and the short selling across single stocks. Last week was the biggest on record going back to 2016, according to Goldman Sachs. What do we know about short selling, Kevin?
fbi_1_02-20-2026_102244:Well, when you gotta cover,
david_1_02-20-2026_102241:Yeah.
fbi_1_02-20-2026_102244:buy it.
david_1_02-20-2026_102241:Yes. Like all, all, all short sellers are future buyers at some point, unless somehow you figure out how to get it to go to zero and things do go to zero, but.
fbi_1_02-20-2026_102244:Right.
david_1_02-20-2026_102241:Just stacking firewood, right
fbi_1_02-20-2026_102244:Yeah, exactly.
david_1_02-20-2026_102241:future,
fbi_1_02-20-2026_102244:you mentioned, IGV, I mean, we're really not that far from a pretty important area where you'd expect support, like around 76 bucks
david_1_02-20-2026_102241:right.
fbi_1_02-20-2026_102244:IGV and I mean it. You know, with like the, how tight the price action's been like this week. I mean, are people taking profits on that already? You know, slowly. So, I don't know.
david_1_02-20-2026_102241:Well, I was gonna, I don't, can you really be short software here?
fbi_1_02-20-2026_102244:Not, no.
david_1_02-20-2026_102241:The move has already happened.
fbi_1_02-20-2026_102244:Yeah, it's, it's been gone for, for a while. I mean, even, even if you broke 76, I don't. Think, I mean, I guess you could, but I don't know. I don't, I don't know if you got enough room really to, to make that happen. And I mean, just technology overall, like XLK holding 1 35 is good to see.
david_1_02-20-2026_102241:What do you think about where a magnificent seminar are right now? If I'm using,
fbi_1_02-20-2026_102244:That,
david_1_02-20-2026_102241:if I'm using mags? Kind of, we're kind of at a, an overused term, but I think it's appropriate for this. We're at a inflection point here.
fbi_1_02-20-2026_102244:Oh yeah. I mean, you're because I mean, I think a pretty decent level you could use if you were shortening that. Right? It's like we'll say 63 just for round numbers
david_1_02-20-2026_102241:I thought you were gonna say six seven.
fbi_1_02-20-2026_102244:No, I don't get how that works. My kids aren't old enough to be using that, which is good. I lucked out there.
david_1_02-20-2026_102241:63
fbi_1_02-20-2026_102244:Or like, I mean,
david_1_02-20-2026_102241:on.
fbi_1_02-20-2026_102244:the high of today so far, the intraday high, like that's, you know, essentially a retest of where a pretty good entry would be if you were shortening that. So, I mean, if you get megs reclaiming like 63 bucks, that's definitely gonna put some pressure If you're short there.
david_1_02-20-2026_102241:Yeah, I think the, I think the mags chart is kind of a telling one. You're highlighting that$63 level, which was where. Support was in October of 25. Buyers showed up there again in November of 2025. They showed up there in January of this year, and we broke that level earlier this month. Can we reclaim it? And if we reclaim it as a technician, that would be a false move, and from false moves come fast, moves in the opposite direction. And now you're talking about all the shorts getting caught on the wrong side at the same time, if you can't reclaim 63, it's, it's gonna be a, a headwind for the market to have megs continue to get discounted. That doesn't mean other stocks can't do well. I mean, shoot, what We're 66%. Of s and p 500 components are outperforming the s and p 500 year to date. That's a healthy churn considering the weakness of a mega and Megs. But can that continue or what do you think about international?
fbi_1_02-20-2026_102244:Yeah, international is still pretty strong. Asia specifically or I would say outside of China, China is really not contributing much yet, at least, but you know, South Korea obviously has been talked about quite a bit, I think on here
david_1_02-20-2026_102241:What hap, what if that happens though? What if China does get involved in the emerging markets? Because you're right, emerging markets look great.
fbi_1_02-20-2026_102244:I mean, it's gotta be game on then, right? I
david_1_02-20-2026_102241:Mm-hmm.
fbi_1_02-20-2026_102244:what percentage is, lemme see what percentage China is in EEM.
david_1_02-20-2026_102241:And I, you know, you, you brought up South Korea. It's interesting that that's considered and it is considered emerging market and we've talked about that in the past. It's just, it would be really something if China got decided to get involved.
fbi_1_02-20-2026_102244:Mm-hmm. Yeah, because Right, especially if you look at like emerging markets, X China, like it, I mean, visually see this like EMXC to just broad emerging markets. I mean, that's that relative chart. I mean, that's. A pretty great deal of outperformance, relatively speaking know, this year. So it's, I mean, it's pretty drastic. So yeah, if China finally starts performing, I mean, pH be a lot of fuel, I think. You know, and it's actually kind of interesting seeing, I mean, I don't necessarily wanna pivot to fixed income yet. Chinese bonds have been doing pretty well, this year so far, which is interesting to see.
david_1_02-20-2026_102241:Well, and I, I think, I think that's a fair. Ferrari Bureau of Investigation statement that if Chinese bonds are leading, that would fair be, you know, credit markets, lead
fbi_1_02-20-2026_102244:Hmm.
david_1_02-20-2026_102241:public markets. And so is that an indicator that there could be strength coming outta China here? I mean, we know that U using Eem. That South Korea has been a major factor, and we look at that. We're really talking about Samsung,
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:and then we're also probably talking about, which is not South Korea, but Taiwan or Taiwan semiconductors. But if China is, it's about 27% of em. So if that could, and, and South Korea is about 1513. 13 to 15% of EM is South Korea, and then you get China to join the party. It is been a while, right? It's been a while since the markets have been a thing.
fbi_1_02-20-2026_102244:Right. I feel like especially for, you know, this long of a duration, I mean. I feel like, you know, historically, like these moves when they do show relative strength, they're pretty short term in nature compared to, you know, I mean, international's been performing now for like, what, probably since like summer of last year. So, I mean,
david_1_02-20-2026_102241:I was gonna say the relationship of something like VE u. So all world stocks minus US stocks versus s and p has really been since the start of 2024 now. It was the first quarter of 2024, and then there was no differentiation. Like you could have owned s and p or VE U and had the same return since Q2 through the end of the year. But here we are again, 2025, strong start to the year for international markets.
fbi_1_02-20-2026_102244:Yeah, actually BEU had kind of an interesting relative load to the s and p kind of right up against like these relative lows from, of end of 22, you know, and really end 23 through the beginning of kind of 2024. So this would be kind of a pretty nice important relative level if it could, you know, get past where it's at now.
david_1_02-20-2026_102241:Yeah. I, I, yeah, I just, it it's really from a risk taking perspective when you, when you think about the risk spectrum with cash and T-bills being on one edge. And then let's call the other side. You know, penny stocks, emerging markets, biotech, anything higher, beta. It's hard to get overly bearish if emerging markets is gonna outperform.
fbi_1_02-20-2026_102244:All right.
david_1_02-20-2026_102241:Like is the world ending if emerging market stocks are getting bid? Both on an absolute and outperforming on a relative basis kind of hard.
fbi_1_02-20-2026_102244:Yeah, you wouldn't think so,
david_1_02-20-2026_102241:And then you throw in things like, I know this is emerging markets, but if you're in P and financials are gonna continue to outperform American financials. All that does is add credence and I, and I think you brought up in our discussions this week as a team in our workbook analysis, like international and emerging market bonds continue to outperform US bonds. And I know we had a client presentation this week with our clients and just bringing up that. Narratives happen after price moves. And it's just interesting that similar to the Biden presidency, your best performer industry was like coal, and some of your worst performers were renewable energy and stocks. And here we are talking about an America first President.
fbi_1_02-20-2026_102244:Oh, then, then you see the international flavor now?
david_1_02-20-2026_102241:And you're seeing international do so well and that's not a statement. Some might interpret that statement as like, somehow Trump's doing something wrong. And that's not my statement. It's just people need to remember that markets are weighing machine, it's looking out six to 18 months in the future. It's a future discounting mechanism. So it's looking out at the prospects of what does the economy, what do. Individual companies look like. What do what does risk look like in the credit market six to 18 months from now? And seeing emerging markets do well, international bonds do well during an American first president. See, and, and I should add, like, and it's not yet, it could be, as we alluded to, it could be a China thing. Coming up here, but it's all these other areas, South Korea, Taiwan, like that's what's leading in the emerging market space.
fbi_1_02-20-2026_102244:Yep. And like Latin America, Southern American countries, I mean, consolidating here pretty much most of the month, end of January, it's, I mean, you know, some of these charts like just looking at broad Latin America, ILF, I mean, looking like we're gonna try to test kind of the. The upper bounds of these consolidations. So I mean then if you get Latin America starting to participate again, I mean it's, just international in general. I mean it's, it's almost to find something internationally speaking that's not participating than it is to find things that are participating.
david_1_02-20-2026_102241:That's a great point. And so here we have an environment where the 4 93 of the s and p 500 are. Are doing just fine. Year to date, megs are lagging, but I would say maybe today is the first indication that your MES get back involved. I don't know, again, that$63 level that you mentioned on MAGS mags important and we're still in an environment where semiconductors are holding up well.
fbi_1_02-20-2026_102244:Yeah. Yeah. Especially, I mean, we've been talking about international ITSM, pretty big player there. Looks pretty good. You know, even been holding up pretty well. I mean, there's definitely, you know, some pretty good tight consolidations in that space. just look through all those individual stocks within that industry, some flirting with breakouts, so it's, yeah, it's definitely a constructive look. SMH still working on four 18 somewhere in there, four 20. So, I mean, if semiconductors start participating again, whew.
david_1_02-20-2026_102241:Yeah, that's,
fbi_1_02-20-2026_102244:It's hard to feel bad about things the bullish side.
david_1_02-20-2026_102241:and it's not like, it's not like we have, you know, not all tech is the same. We've covered that. There's different, so software ETFs, when you think about big tech, not all big tech is the same. You have big software names, but you also have big semiconductor names. And then you throw in things like industrials and materials doing well. I mean, we've got some pretty major players in the industrial space doing well, don't you think
fbi_1_02-20-2026_102244:Yeah, Caterpillar's doing well. John Deere's been doing really well lately. I
david_1_02-20-2026_102241:Johnny Popper is popping?
fbi_1_02-20-2026_102244:yeah, it's about time. And. We kinda talked about like, you know, railroads looking more interesting. I mean, relatively speaking, they're not necessarily outperforming or anything like that, but at least on the absolute basis, starting to move out of some con So it.
david_1_02-20-2026_102241:Well, yeah, I mean railroad NASDAQ railroad index, which we don't have an ETF for. And I feel like if you came up with ETF ticker rail, I'm gonna do well and fresh, all time highs breaking out of a pretty good consolidation. So we're transporting goods. And I know in some of your work this week you brought up, it's not just shipping rye rails, but shipping by water.
fbi_1_02-20-2026_102244:Yeah, shipping, really hot boat. You know, we've kind of talked about like on the future side too, like if you're, that your, you know, like freight contracts and things using like be wet or be dry, those have been doing really well.
david_1_02-20-2026_102241:Yeah, those are fascinating. What, what an interesting product to build, you know, an ETF that represents shipping contracts and be dry and be wet. Not too shabby.
fbi_1_02-20-2026_102244:Mm.
david_1_02-20-2026_102241:I mean, tanker shipping futures contracts up 28% this week. I don't know, man. Does that sound like recession? I.
fbi_1_02-20-2026_102244:I dunno. I mean, you got aerospace and defense looking like they wanna start participating again. I mean, geez. Kind of leading the way there. I mean, yeah, you're definitely. Right. Weight of evidence wise, it's, I think it's hard to be, you know, on the bare side of that,
david_1_02-20-2026_102241:Well, aerospace and defense too, right? We're always looking for good narratives. You think that has to do with the war drums over Iran.
fbi_1_02-20-2026_102244:I guess it could. Right. I don't know for sure.
david_1_02-20-2026_102241:And I mean, if, if there's major geopolitical or a major historical event involving Iran, that's bad for markets, right?
fbi_1_02-20-2026_102244:Necessarily.
david_1_02-20-2026_102241:What Kevin? That doesn't fit the narrative of most investors. I was thinking about Ian's field trip today with his son and they're, you know, they're doing a cool trip to a museum. One of the best field trips I was ever on. It is the best, is, you know, I lived out in Virginia at the time and this would've been like sixth or seventh grade, and I got to attend. Terry Anderson's release from his captors, and he, this was Lebanon. I know that's not Iran, but it was a Middle East, middle East thing, and I got to go to the press conference where he was at when he got released. You don't know what you're witnessing when you're.
fbi_1_02-20-2026_102244:I don't say at that age, really? I no idea.
david_1_02-20-2026_102241:I mean, it was just an incredible experience as a student, as part of a social studies class to go witness this press conference on a guy who had been hauled hostage for years. But to your point, you know, you look back at major geopolitical events, you know, whether it's the uss. Coal Yemen bombing or the Yam Kippur war, I mean, more often than not 12 months out were higher.
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:I mean, back in 2020 took out the general Iranian general in a airstrike up 14% after that. So I don't, you know, I, you can't just assume that if we have some type of strike, and I, maybe I'm spending too much time on this, but I will say that the the pizza metric is alive and well around the Pentagon
fbi_1_02-20-2026_102244:Yeah,
david_1_02-20-2026_102241:and it,
fbi_1_02-20-2026_102244:it, it does seem like there's a lot of movement. Towards Iran. And I'm not saying it happens this weekend. I'm not a uh uh, war strategist, but it does seem like there's some flexing going on. And do you to be surprised if this weekend or in the coming weeks, maybe in the next month, you get some type of event that involves US military and Iran? I don't know. But I think my, my main point is that we shouldn't just assume that if that happens, it's a bad thing for stocks.
fbi_1_02-20-2026_102244:And I think wasn't that kind of a bigger. I don't know, worry narrative back, you know, with like Iraq and like oh three. that kinda a popular narrative then, which obviously that turned out not to be the case for the market anyway.
david_1_02-20-2026_102241:Oh yeah. A hundred percent. And believe it or not, I was involved in markets back then. I'm not that old, but I am that old. But yeah, going the invasion of Iraq in oh three, 12 months later, up 26%. Now, there's exceptions. I don't wanna make it seem like it's all roses and rainbows, but I'm, I'm just here to remind our listeners and our clients that even if there's some type of major event. It doesn't have to mean stocks go down.
fbi_1_02-20-2026_102244:All right.
david_1_02-20-2026_102241:Where else? What else would you wanna take us to worth highlighting for our listeners this week?
fbi_1_02-20-2026_102244:Oh. What about, I mean, we're kind, you kinda mentioned this before we hopped on, is gold or gold and silver gonna kind of start participating again and are we
david_1_02-20-2026_102241:Wouldn't,
fbi_1_02-20-2026_102244:back into that?
david_1_02-20-2026_102241:wouldn't that be something, you know, you have a once in 100 year move in silver and gold to. Basically, you know, basically 2025 through the first part of 26 corrective move. But silver is now trying to record a bullish eng golfing on futures for the week. And you do wonder if it can get going again or is it just counter trend move?
fbi_1_02-20-2026_102244:All right. I think a little early to tell for now, but It's definitely interesting, using GLD like instead of futures, I mean, if you see GLD north of, you know, 4 68, 4 69, you know, getting closer to like four 70, I mean, that's definitely a level you could use if you wanted to hop in there. silver? Like 76, 50, something like that. 77. I think the, just the gold and silver relative chart too is kinda interesting.
david_1_02-20-2026_102241:Are you talking about relative to like the s and p or relative to each other?
fbi_1_02-20-2026_102244:to each other. Yeah. So like gold versus silver, like views, GLD to SLV you know, that's kind of retested. Roughly the underside of, some pretty important previous, you know, support in like gold's favors, like what you would expect to be potential resistance now. You know, kind of like those lows from like 2021 around 2017. You know, it's kind of a level as you go back, it's been pretty important. Historically, silver looking like, at least for now, you have to expect that if they do continue to move higher, that silver's gonna continue to outperform on a
david_1_02-20-2026_102241:and that would be, that would match. Then I think the point you're making is in a metals, precious metals complex bull market, you typically see silver outperform gold. And so if we see this hold this week and move higher, that would be confirmation. Of that scenario,
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:which then as a technician, I think you look at, well then are the miners going to outperform the metal? That's also to to be determined. They had been until this point, but I tell you what, GDX versus gold or you know, gold miners versus gold. Consolidating very well here and wouldn't that be something?
fbi_1_02-20-2026_102244:I would.
david_1_02-20-2026_102241:What do you think about energy? I.
fbi_1_02-20-2026_102244:Pretty tight lately. just like underneath the surface, if you split that, like kind of your two bigger sectors like exploration and like services, I think, using like XOP and X-E-S-X-E-S was. You know, when like this move first started in energy, kind of the the relative place to be. But what's kind of interesting, if you look at XCS versus XOP, you know that that relative chart there kind of getting rejected in an area that, it has previously, you know, kinda like 0.75 where it has before. So not looking like. You know, maybe XOP is gonna kind of take the lead there, which, you know, with how well ExxonMobil has done more recently. I think it's kind of interesting the timing there. I mean, not so much today. Yeah, it's still interesting. I mean, you get like a kind of a marine shipping, two flavor and energy. I mean, that's been pretty consistent
david_1_02-20-2026_102241:Oh, really?
fbi_1_02-20-2026_102244:industrial's energy. Yeah. They kinda split some of that up.
david_1_02-20-2026_102241:So are you saying that there's some shipping in XLE and in industrials or.
fbi_1_02-20-2026_102244:it'd be like a little bit of a, a split, like if you just look at a, like boat exposure in general, but I mean, it's definitely more heavy industrials, in boat that's technic like not quite 30%. It would be considered in the energy space, which I'm assuming has to do with like where probably oil specific shipping, things like that. Coal, maybe they throw them in the energy sector, but there's still pretty big representation, of shipping and energy. So that's, that's gotta help there a little bit.
david_1_02-20-2026_102241:Yeah, I would think.
fbi_1_02-20-2026_102244:I mean the s and p relative chart versus energy is, kind of interesting, got a break of that downward relative rate of trend, It kinda depends how you wanna draw it. You know, if you look more near term, like using your 2023 highs, got a break there. If you go back to like 2011. Maybe more so just testing the up bounds of that.
david_1_02-20-2026_102241:And it is gonna be really hard if you know. ExxonMobil's breaking out of a base on base that goes back years. If that's gonna do well on absolute base, it's gonna be really hard to drag down energy sector result as a whole, considering ExxonMobil's almost 24% of XLE.
fbi_1_02-20-2026_102244:Yeah, that's a huge waiting.
david_1_02-20-2026_102241:And then if the materials trade continues backed by gold and silver min miners, and you've got industrials doing well. I mean, can you imagine if tech gets involved?
fbi_1_02-20-2026_102244:Well, that's the thing'cause you got your value areas, right? Participating now. Yeah. You get some of those shorts out on the tech side. I mean, you could have a pretty crazy move to the upside pretty quick.
david_1_02-20-2026_102241:Yeah, agreed. Like full participation
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:and. You know, you, you look at the shorting that's going on, you know, you got, you do have a fair, as we've talked about, fair amount of shorting, and this is happening in a 2% range on the s and p 500. The ta, the table's kind of set here if that, those, if those shorts have to cover, you could see the next few months be higher, pretty aggressively if software and mags decide to participate.
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:And the, and the flip side also, you know, I, I've used this analogy before. The rubber, the rubber band is stretched and that's why it's an inflection point. So either the rubber band snaps and we get another 10, 15, 20% move in software to the downside may continue to correct and we break 6,800 in SAP. That's one thesis. The other is. The rubber band comes back to its mean to its rest state and tech gets involved and we get a a quick five, six, 7% move higher and break to new highs above 7,000.
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:Can you talk a little bit about, during our presentation for clients this week, you talked about our top down process using relative strength. Can you walk through? I think that's worth walking through that process from a technician standpoint, right. Technical analysis. The study is supply and demand. Supply and demand is what dictates price. Price is what dictates the opinions of all market participants. And look six to 18 months in the future. Can you just talk through why you can't just like. Buy and hold and create a 60 40 portfolio and be done.
fbi_1_02-20-2026_102244:Yeah, I mean, if you think in terms of relative strength, like what is the point of using it at all? Right. I mean, I guess, well, kind of two ways to look at it. know, cost is a real thing, right? I mean,
david_1_02-20-2026_102241:What do you mean by that? What is, what is opportunity cost?
fbi_1_02-20-2026_102244:yeah. So like if we're, we're always starting with, just absolute trend, right? Like if something's not in an uptrend, there's no point in owning it at all. But when, you know, just the broad market in general's in an absolute uptrend, you know, it doesn't necessarily mean that they're, you know, the broad markets in the strongest uptrend, right? There's always gonna be of the market that are relatively outperforming others. So, you know, if you just buy the broad market, there's an opportunity cost there If you're not willing to own those specific. You know, industry sectors within the market that are actually outperforming the broad market in general. Or like in this case, you know, just international equities, you know, if you're only willing to own US equities, well now we're seeing relative outperformance, you know, internationally. So there's, you know, opportunity costs or missing out alpha essentially you know, by not participating in some of those areas. So, I mean, that's With relative strength using like some of these ratio charts, you can kind of. Identify, you know, when opportunity cost is getting involved or really just opportunity outside of the broad market. Which I think is probably almost an easier way to think of it. And especially in terms of like a top down approach. So, I mean, I like to think of it essentially as a funnel, So the top of your funnel is. You know, your entire investible universe, whatever you have to work with whatever you can participate in, right? So, like for us, generally speaking, know, we're pretty ETF focused not necessarily participating too much in individual equities but you can definitely throw'em in this bucket, right? So, know, step one for us being technicians, what's in an absolute uptrend? Well, you know, at any point in time. In these broader market uptrends. I mean, you could be talking two, 3000, you know, just individual ETFs. You throw individual stocks in there. I don't even know what that number would be. It's, you know, it's crazy. You know, you just can't buy all of those. I mean, I guess you can, but then, right, there's gonna be opportunity, cost involved. You wanna maximize you know, your return there, relatively speaking. So then really it's just a way to continually narrow down where you want to be looking within the market to kind of find your, you know, strongest relative performers, your strongest absolute uptrends, and then kind of work with it from there.
david_1_02-20-2026_102241:So you're, you're basically starting from, you have a dollar,
fbi_1_02-20-2026_102244:mm-hmm.
david_1_02-20-2026_102241:where should that dollar go?
fbi_1_02-20-2026_102244:Right.
david_1_02-20-2026_102241:And first and foremost, it should, it should go towards something that has a absolute uptrend,
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:step two. Relative uptrend. So let's just use SAP like something compared to the s and p, right? Because we could just take that dollar and put in the S and p. That could be, that could just be what we do.
fbi_1_02-20-2026_102244:Yeah. I mean, that's probably right, like if you're just deciding to participate in the market as a whole, I mean, that's essentially step one. Right. Like at least you're keeping up then with the market at that point.
david_1_02-20-2026_102241:And then step two is you're looking at the things versus the s and p.
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:And maybe someday we'll be talking about versus emerging markets, or VER versus
fbi_1_02-20-2026_102244:of, I
david_1_02-20-2026_102241:international.
fbi_1_02-20-2026_102244:already, right? I mean,
david_1_02-20-2026_102241:Yes.
fbi_1_02-20-2026_102244:on a long term basis where like emerging markets is replacing the s and p, like is step two in that equation? But I mean, yeah, there's still a factor
david_1_02-20-2026_102241:Yeah. And so then that narrows the list down, if I'm understanding you correctly. And then, then you look at what's in the portfolio already.
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:So the what's in the portfolio is who's in the club. So basically you're both FBI and Bouncer, and you're saying, Hey, does this person get to go in the club or does this stock or ETF get to go in the club? Well, it's gotta be on an absolute uptrend. It's gotta be good looking, and then it's gotta be good looking to its peers and then it's gotta be more viable than something that's already in the model.
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:And then that's how you drill down. And then, and then there's the risk management piece.
fbi_1_02-20-2026_102244:All right. Yeah, you still gotta go to the absolute chart at the end of the day, right? So, I mean. You know, like you were talking, could you, I mean, maybe not necessarily a great example in this case, but like, could you be shorting software here? You know, that risk versus reward on that absolute chart? You know, I mean for just because something's showing relative strength to the market as a whole or another position within our portfolio. You know, if that risk reward, you know, ratio doesn't make sense. And you just gotta pass. You know what I mean? You're not always at that point in time when something finally starts showing, relative strength to the market as a whole or something in the portfolio. know, like those absolute entries don't necessarily always line up to where, you know, you can set of a stop loss. That makes sense. So I mean it, you know, everything doesn't always line up there
david_1_02-20-2026_102241:Yeah. And I,
fbi_1_02-20-2026_102244:of the time.
david_1_02-20-2026_102241:I th I think a good example of that would be like silver, you know, a couple weeks ago, let's call five weeks ago, and silver's sitting 140% away from its 200 day moving average and has already had a six or seven sigma deviation move, meaning like a once in 100 year moved. Is that really, even though it's got relative strength, is that really where you can enter? No.
fbi_1_02-20-2026_102244:Mm.
david_1_02-20-2026_102241:But now it's kind of reset itself
fbi_1_02-20-2026_102244:All right.
david_1_02-20-2026_102241:and we're, we've now cut that distance away from a 200 day in half, 77 bucks on silver futures. Could you be long, you're still having a relative strength piece there. That's not a recommendation. It's not financial advice. But I to your point with this top down analysis, so the other thing you're, you're saying here is top down, not bottom up. Right? We're not looking at. Balance sheet releases. We're not on earnings calls. It's more about what is the mar market environment? What's the opportunity cost? Where is the strength, and invest in themes of strength.
fbi_1_02-20-2026_102244:Mm-hmm. exactly.
david_1_02-20-2026_102241:Love it. I thought you did a great job with clients this week on that. I think it's appropriate at this time. To 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 two of the most prevalent factors in markets, momentum and relative strength through proprietary identification methods. The adaptive Select ETF attempts to own the strongest 25 large cap stocks when the market is an uptrend. And since not all market environments are the same. Adaptive Select seeks to prevent extended declines by moving to 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 principle a dvs distributed by Quasar Distributors LLC. So we covered a lot of ground. Kevin in this episode. Anything else you want to touch base on? We haven't talked crypto. We talked a little bit about bonds. We did cover some commodities. We didn't talk about oil. Oil looks like it might be setting up. We'll see on in that regard. But what are you, what are you seeing on a crypto?
fbi_1_02-20-2026_102244:Crypto. I thought that's not dead yet,
david_1_02-20-2026_102241:And maybe that's when it comes back, is when it is.
fbi_1_02-20-2026_102244:No kidding, right? It sounded like it was gonna be there for a while. Yeah, Bitcoin hanging out around around six, 7,000. It's been, pretty tight here lately. At least for now, kind of found a little bit of support right around kinda the 21, 22 eyes. I guess we'll see. I mean, really, unless, until that really reclaims, we'll call it like seventy two, seventy 3000, somewhere in there, just kind of eyeballing it. And I think it's still kind of hands off just from an absolute perspective. It is an interesting relative level to like the s and p. like if it does maintain support here, reclaim 73,000. I mean that would kind of happen at an interesting relative level that's kind of wrapped around, before. So that would be intriguing. But I mean, for now,
david_1_02-20-2026_102241:Well, and,
fbi_1_02-20-2026_102244:off.
david_1_02-20-2026_102241:and a on an absolute basis, it is intriguing that it's holding the volume weighted average price from the November, 2022 low. That's what it's held so far, but still below the volume weighted average price from the big move down in early February. So it's like this compression that's happening,
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:a decision will be made soon on Bitcoin. I cannot tell you which direction it will go, which I could. But it appears that another move is getting built up here. And I, I would say the same thing for the cap weighted s and p 500. There's, there is a move coming from compression comes expansion. We talked about a 2% range in s and p 500. And if you just, if you just line up all the pieces where you've all already seen the Magnificent seven down to their 200 day, which is rising. You've already seen software get crushed. You've seen the No, the, the news come out about oil owl capital, possibly freezing redemptions. Now there's conflicting reports on that'cause some reports are saying that they froze redemptions on their private, private credit. Others are saying no, they're actually advancing their, their distributions outta there. So you can't really be short those things, but yet you have. Really aggressive shorting going on by speculators, both on volatility and on equities as a whole. There is a large move coming
fbi_1_02-20-2026_102244:You.
david_1_02-20-2026_102241:and is the large move direct from here? Like we hold 6,800, we just rip higher through 7,000. Is it? We break 6,800 and we actually accelerate to the downside. And other stocks Correct. Along with the mags or do we get some type of event? Such as a geopolitical one or something else, or I don't know what it would be a flush below 6,800 and then we get back above 6,800 and now the shorts have to cover.'cause it's really bull markets don't end with this aggressive shorting. It, it, it's, it's not like everybody knows at the top it's the top. And so everybody's short. But is there further downside? There could be, we're about 7% away from a 200 day moving average on the s and p. Could we go, could we go visit that? Because that's what the seasonality says too. Last part of February, the middle of a midterm year, you t typically get somewhere like a 12% draw down. Do we get that? It, it, it, the table is set for the short staff to cover here.
fbi_1_02-20-2026_102244:Mm-hmm.
david_1_02-20-2026_102241:Is it next week or is it after a flush? I don't know, but typically you don't see put call ratios like this and this type of progressive shorting with megs and software already discounted like this.
fbi_1_02-20-2026_102244:Right.
david_1_02-20-2026_102241:Anything else, Kevin, that you wanna highlight for our listeners before we tell'em to give us a high ranking?
fbi_1_02-20-2026_102244:I mean, it's just got that feeling right. Could this many people be right like this? You know what I mean? Just, I don't know. You wouldn't think so. I mean, primary trends up, right? So I
david_1_02-20-2026_102241:Yeah, you want, you, you, the odds are that the consolidation breaks in the direction of the primary trend.
fbi_1_02-20-2026_102244:mm-hmm.
david_1_02-20-2026_102241:Now, if it doesn't, that's huge information
fbi_1_02-20-2026_102244:yeah.
david_1_02-20-2026_102241:and that comes with a caveat when I say if it doesn't right, we break, break below 6,800 on the s and p 500. If that's sustained, that's a problem. But if we quickly recover that, and that was some type of flush to get everybody else to jump on the same side of the boat as most are right now with sentiment the way it is, I mean that could be a really rip your face off move if we reclaim 6,800 after breaking below it. But if we stay below 6,800, that's a little bit problematic because the consolidation wouldn't be breaking in the direction of the primary trend. So great, great point there.
fbi_1_02-20-2026_102244:Yeah. Especially with the 200 day being, you know, right around six 500, which would be kinda your next high importance level of expected support.
david_1_02-20-2026_102241:Mm-hmm.
fbi_1_02-20-2026_102244:Something there. You know, those two things are kind of conversion there too as well. If we do move lower or below.
david_1_02-20-2026_102241:Well, we, and we do have this interesting, you know, scenario upon us where midterm election years, you typically have a corrective period. That is either starts in spring or you know, like February through spring or and and bottom somewhere in the summer. But from that bottom, and again, I'm not saying where the bottom is. I'm not saying we get more correction and that there's a bottom in summer. That's not what I'm saying. I'm just saying that midterm election years, that from the bottom of that midterm election year, that final year, that coming out of that. It is super aggressive. So the likelihood of corrective behavior and wherever that bottoms in 2026, that from that will be opportunity. That's not a guarantee, but that's historically what's happened. So we'll see. I mean, that's why we're Beijing. That's why we studied price. We could look back at this episode and what I just said and said. While you're an idiot. Well, I'm not, you know? Yes, I am an idiot, but it's why I use technical analysis. I can change my opinion. Strong opinions loosely held at least technical analysis lets us know where we're wrong. Anything else, before we get outta here?
fbi_1_02-20-2026_102244:No, I think, I think that's about it.
david_1_02-20-2026_102241:All right. Excellent. Well, thanks for doing this. You always do a great job. You're a star here at Client First. We appreciate you.
fbi_1_02-20-2026_102244:Thank
david_1_02-20-2026_102241:ask All those listening to us to share this episode with your friends. Get the word out. Give us high ranking on your platform a choice. That's a compliment to us. We really appreciate it.
fbi_1_02-20-2026_102244:Thanks. Have a good weekend everybody.