POST-JOBS ANALYSIS & CPI AHEAD

AFTERNOON MARKET COMMENTARY

POST-JOBS ANALYSIS & CPI AHEAD

Thursday, February 12, 2026 –

Timothy McCandless – Protected Wheel Strategy

⚠️ CRITICAL MOMENT: Jobs beat expectations (130k vs 53k) BUT markets sold off. CPI tomorrow will determine if this was profit-taking or the start of distribution. Software -21% in one month. Nasdaq down 3 weeks in a row. Energy +2.6% yesterday. The Great Rotation accelerating.

SECTION 1: MARKET OVERVIEW

Wednesday Post-Jobs Close

DOW: 50,121.40 (-0.13%) | Down 66 points despite jobs beat

S&P 500: 6,941.47 (-0.01%) | Essentially flat

NASDAQ: 23,066.47 (-0.16%) | DOWN 3 WEEKS IN A ROW

VIX: 17.65 (-0.8%) | Compressed BUT CPI tomorrow

10-Year Treasury: Yields dipped from Wednesday highs (watching for CPI impact)

Wednesday’s Jobs Report

• Nonfarm Payrolls: 130,000 (vs 53,000 expected) = BEAT by 2.5x
• Unemployment: 4.3% (vs 4.4% expected) = Slight improvement
• December Revision: 48,000 (downward revision)
• Key Detail: Growth concentrated in healthcare (+124k) = Narrow strength

Market Reaction: SELL-OFF despite beat

• Why? Stronger jobs = Fed less likely to cut rates = Yields spiked initially
• Translation: Market wants Fed cuts MORE than strong jobs

Thursday Pre-Market Status

• Major indexes edging UP early Thursday
• CHIP STOCKS SURGING: Micron +10% Wed, +3% pre-market | Memory/AI stocks rallying
• NVDA, TSM, TXN all up 1%+ pre-market
• Initial jobless claims: 227k (vs 230k expected) = Slight beat

KEY OBSERVATION: Market SOLD jobs beat, NOW bouncing on chip strength. But CPI tomorrow = THE DECIDER. If inflation hot = Rate cut hopes die = Tech sells more. If inflation cool = Rate cuts back on table = Tech bounces.

SECTION 2: SECTOR ROTATION – ACCELERATION

THE GREAT ROTATION ACCELERATING

Wednesday’s Sector Performance:

🟢 WINNERS:

ENERGY (XLE) – +2.6%

• STRONGEST sector yesterday
• Data center power demand + oil prices = Multi-driver strength

8 of 11 S&P Sectors POSITIVE

• Market breadth STRONG despite index weakness = Rotation, not decline

New 52-Week Highs: 99 (S&P 500)

• Individual stocks hitting highs WHILE Nasdaq declines = Classic rotation

🔴 LOSERS:

FINANCIALS (XLF) – -1.5%

• Worst sector Wednesday

COMMUNICATION SERVICES (XLC) – -1.3%

• Large-cap tech drag

SOFTWARE – Down 21% in ONE MONTH

• ServiceNow -6%, Salesforce -5% yesterday
• IBM -6.5% = Worst Dow performer
• AI disruption fears = Software SaaS in free fall

CRITICAL: Semiconductors (Micron, NVDA, TSM) bouncing WHILE software continues distribution. This is CHIP rotation AWAY from software, NOT tech sector strength. Watch your scan closely.

SECTION 3: YOUR FINVIZ SCAN – TODAY’S FRAMEWORK

RUN YOUR SCAN NOW. Market is bouncing pre-market on chip strength BUT CPI tomorrow = Major wildcard. Your scan will show if institutions are buying the bounce or positioning defensively.

Three Possible Scan Outcomes

✅ SCENARIO 1: Energy/Industrials/Materials Dominate (40%+)

• What it means: Institutions buying The Great Rotation (Energy +2.6% leading)
• Your trade: EXECUTE Energy/Industrials/Materials collars
• Priority: Energy (XLE names) OR VRT, GEV, ETN (Industrials) OR FCX, SCCO (Materials)
• Confidence: HIGH – Sector momentum confirmed by yesterday’s +2.6% Energy move

⚠️ SCENARIO 2: Semiconductors Dominate (50%+ tech)

• What it means: Chip bounce (Micron +13% two days) BUT software still distribution
• CRITICAL CHECK: Is your scan showing MU, WDC, STX, NVDA, TSM? Or software names?
• If CHIPS: Maybe tradeable BUT risky before CPI (Nasdaq down 3 weeks)
• If SOFTWARE: AVOID – Still in distribution (-21% one month)
• Confidence: LOW to MODERATE – Counter-trend before major CPI data

⚠️ SCENARIO 3: Fragmented (35%+ RED)

• What it means: Institutions defensive before CPI
• Your trade: NO TRADES – Wait for post-CPI clarity
• Why: Your edge (sector concentration) gone when fragmented

SECTION 4: COLLAR TRADE PRIORITIES

IF your scan shows Energy/Industrials/Materials strength:

Priority 1 – Energy (NEW LEADER)

XLE Component Names

• Yesterday’s move: +2.6% = Strongest sector
• Catalyst: Data center power demand + oil strength
• Your edge: Fresh sector leadership + individual momentum from scan

Priority 2 – Industrials

VRT (Vertiv) / GEV (GE Vernova) / ETN (Eaton)

• Catalyst: Amazon $200B + Alphabet $185B CapEx
• All-time highs recent + multi-year AI infrastructure driver

Priority 3 – Materials

FCX (Freeport) / SCCO (Southern Copper)

• Copper demand for AI infrastructure buildout

IF Semiconductors in Your Scan

MU (Micron) / WDC (Western Digital) / NVDA

• Opportunity: Micron +13% in 2 days, AI memory demand
• Risk: Nasdaq down 3 weeks, CPI tomorrow = Risky before major data
• Decision: Only if <20% RED in scan AND small position size

AVOID COMPLETELY

• Software names: ServiceNow, Salesforce, IBM, ANY SaaS
• Why: -21% in one month = Still in distribution phase

SECTION 5: CPI TOMORROW – THE DECIDER

WHY CPI MATTERS MORE THAN JOBS:

• Strong jobs = Fed LESS likely to cut rates
• Hot inflation = Fed CAN’T cut rates
• Market reaction: SOLD jobs beat because it delays cuts

IF CPI RUNS HOT (above expectations):

• Rate cut hopes DIE → Tech sells more (Nasdaq already down 3 weeks)
• Russell 2000 pressure (floating rate debt hurts) → Rotation PAUSES

IF CPI COOLS (meets or below expectations):

• Rate cut hopes REVIVE → Tech bounces (chip strength continues)
• Russell 2000 rallies → Rotation ACCELERATES

10-Year Treasury Watch:

• Above 4.40% = DANGER ZONE → Pressure on all growth assets
• Below 4.10% = GREEN LIGHT → Rotation accelerates

SECTION 6: 6:40-9:00 AM WATCH

Today = Chip bounce test. CPI tomorrow = The real decision. Watch:

• 1. Does chip rally (MU, NVDA, TSM) extend OR fade?
• 2. Does Energy maintain yesterday’s +2.6% strength?
• 3. Does software continue distribution OR stabilize?
• 4. VIX at 17.65 = Does it compress further OR spike before CPI?

Decision Timeline

• 7:10 AM: IF scan shows Energy/Industrials 40%+ = Execute Priority 1
• 8:00 AM: IF scan shows chip bounce BUT <20% RED = Consider small position
• 9:00 AM: If uncertain OR 35%+ RED = WAIT for post-CPI clarity

SECTION 7: BOTTOM LINE

MARKET SOLD JOBS BEAT → CPI TOMORROW = THE DECIDER

What Happened:

• Jobs beat 130k vs 53k expected = Strong
• Market SOLD the beat = Wants Fed cuts more than jobs
• Energy +2.6% = Rotation leader
• Software -21% month = Distribution continues
• Chips (MU, NVDA) bouncing = Counter-trend OR sector rotation?

Your Decision Framework:

• IF scan shows 40%+ Energy/Industrials/Materials: EXECUTE (Rotation confirmed)
• IF scan shows chip bounce <20% RED: Consider small position (risky before CPI)
• IF scan shows 35%+ RED: NO TRADES (Wait for CPI)

RISK LEVEL: VERY HIGH – CPI tomorrow

PREMIUM: Good to Rich (Energy elevated, Industrials rich)

Energy +2.6% | Software -21% | Nasdaq Down 3 Weeks

Commentary compiled: Thursday, February 12, 2026

The Great Rotation accelerating. Energy new leader.