Bringing expectations back inline - consistent with a February Expiration that had a lot of folks looking for 'more' from the Trump 2.0 'honeymoon', and a recollection of previous tops made amidst Q1 exuberance in the Indexes, is sort of the kind of move that both set-up the momentum stock failure, and the washout, that should lead to some squabbling and then a March rebound.

As I speculated over the last couple weeks, we thought there was no upside of any significance for the S&P or the NDX; they were just cruising along at record highs without the breadth of the broad market supporting any of that.

So you were 'internally' engaged in 'reversion to the mean' with S&P 'masking' that, which is what we also said. My question was whether the smaller stocks, mostly 'relatively' attractive values compared to mega stocks, could weather the big-cap tech tumble, or whether the 'psychology' would spook investors.

I'm not going to sort through the wreckage; and have said big-cap shakeouts were overdue; with a key February Expiration contributing to the reticence on the part of buyers, in a market with a split-character below the surface, daily.

If you add in a 'growth scare' (as was my point about Walmart and tariffs as is normal when they show up) you get the risk of 'stagflation' as I alluded to also.

Market X-ray: we have not endorsed euphoric expectations, aside the initial welcome to Trump 2.0 and a belief 'deregulation' would arrive.

Sure, but with a 'growth scare and stagflation' shakeout; it has to be digested to get to the point of anticipating an acceleration of growth; as of course it's premature to expect dramatic earnings from AI etc., yet. The Univ. Michigan 'sentiment' reflects all this too; but keep in mind you should see re-balancing as millions of shares change hands at Monday's start; and then margin-calls I suppose to those over-extended during this 'momentum stock distribution' of the past couple weeks; and then we should be set-up for a key rebound try.

I thought January would be upside; and February rough (correcting excess), and March see a rebound; but mostly interest in ticker-specific plays (that's a continued view; as we haven't seen value in the expensive stocks for ages). The 10-year Yield drop reflects 'growth scare' and tariff impact concern too.

If I must add 'one more thing', it's rumors in British papers that Zelensky is going to abandon his cause (flee to his villa on the Med); Putin declaring any victory over Ukraine, amid some deal with Trump. There is truth to demands for Natural Resource 'royalties' (I actually showed graphs of that this week).

What do I think? Kiev will not surrender; Zelensky stays; and Trump will get a deal for 'resources'; but probably some commitment to continue equipping the Ukraine Armed Forces and more. However, the extent to which there is U.S. pressure for Ukraine to surrender territory; likely won't be heard much of ... yet. In the final analysis, parts of Eastern Ukraine, or even Crimea, go to Russia.

This entire episode: face-saving to Putin because Trump's being transactional which we all understand, but lacking sensitivity to those suffering from Russia; including the Russian people, now finding vacating Putin an impossible task.

As to the rest of it, sounds like Russian propaganda / wishful thinking; so far. We continue to believe pandering to Russia and reversal of tone to Ukraine, is distasteful, unwarranted and demoralizing those fighting the aggressors, even if it's part of a very complicated approach to disentangling and negotiating.

Above all it's an effort to generate 'peace'; and extract tangible results.

Keep in mind the market is very skeptical; and should have this 'wall of worry' at the same time there is lots of available cash (liquidity) for buying; but who in the world wants to buy 'multinational big-caps' when there's no assurance of pricing, revenue, or tariff-related inflation expectations. That's why we have focused on less macro-sensitive small stocks (or new-era stocks); but people and money managers (who sometimes are people; but often algorithm-driven) tend to run for the hills 'en masse', and hence you have the market air-pocket.

We have expected turbulence all month and said we were surprised it took so long to get consideration of the negative effects and portends; and believed in particularly S&P or NDX, should have broken to the downside even sooner; so actually managers had more time to distribute positions; but often didn't do so until the 'algos' required it, and then you get a momentum panic, whether it is a buying opportunity or not. We think the big-caps will merely rebound as of course the background is extremely uncertain for so many industries; while of course here and there individual stocks (even Quantum tickers) will respond a bit on their own varying with news; but the psychology isn't very supportive.

On the other hand, a rapid arrival of despair not only heightens already noted prospects for a breakdown in February and lead-up to a Spring rally, but might even persuade the Fed to engage in somewhat-unexpected..further rate cuts.

Certainly this February expiration day stimulated anxiety and uncertainty; and at the same time we talk of post-Expiration revival in some volatile stocks; that is not to say it won't be a bit of an irregular process, as many debate if Index breaks are more significant. To us it's a delayed reaction to an expected rough February; and reflects the outrageous multiples in many S&P components.

Many big-caps are still very pricey; nevertheless some sort of rebound should be on the agenda. Some concern about an initially nervous Monday as many market-makers will re-balance for the next (weekly) expiration, but for many stocks you won't see the millions of shares a week hence; versus Friday's February Expiration shares assigned as option-players positions carry costs often exceeding their modeled returns.

I know everyone is frustrated; more so because the erosion preceded heavier shakeouts which met an absence-of-bids for more interesting new era tickers too. However, none of this overall deviates from expectations; just not fun and I get that. I suggest an even keel; recognizing this is all a process of bringing in lagging stocks (eventually) while curtailing the land-grabs of mega caps.

The coming week brings SalesForce and Nvidia quarterlies too.

Transports are down; I warned about Airlines (even Delta) and we all know of FedEx competitive aspects; and since everything was impacted; there's not a single reason for me to go through these stocks or sectors. Everything heavy. I expected 'less' corporate travel given the 'video age' (don't need a pandemic to primarily converse or negotiate deals by video/text rather than in-person). I also talked about the 'cruiselines' being pressed by Washington also.. and no

I would not buy them; and prices will be see better deals if the consumer feels pinched. A lot depends on whether tariffs are 'really' heavily implemented, as a lot of CEO's (and consumers) reassess their spending levels going forward. I have already heard from a couple who deal with the complexities of 'costs of goods' increasing; or not being available, or just uncertain how to plan things.

Bottom line: momentum broke for the 'mega-7' (now lagging-7) stocks weeks ago; and now the 'headline' debacles per day impacted the Indexes finally. It was Nvidia weeks ago, this week Walmart; then today UnitedHealth Group.

These moves 'can' be an exhaustion incidentally concurrent with Expiration; but some shuffling is likely at the new week's start; preparatory to rebounds.

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