MORNING MARKET COMMENTARY

DISTRIBUTION DAY 2 + SECTOR ROTATION ANALYSIS

Tuesday, February 24, 2026 – 56% RED + Materials Collapse

Timothy McCandless – Protected Wheel Strategy

💀 DISTRIBUTION + SECTOR ROTATION: Your scan: 56% RED (9/16), 16 stocks. Sector rotation: XLB (Materials) -1.1% collapsing (CENX -1.43% confirms), XLE (Energy) +0.8% (OII/VAL green confirms), XLK (Tech) -0.3% waiting for Nvidia. MICRO scan + MACRO sectors = Complete distribution picture. NO TRADES.

SECTION 1: MARKET OVERVIEW – MONDAY BLOODBATH

Monday Carnage Sets Tuesday Tone

  • Dow Jones: -820 points (-1.7%) to 48,804 – Trump 15% tariff chaos
  • S&P 500: -1.04% to 6,838 – Broad distribution
  • Nasdaq: -1.1% to 22,627 – AI anxiety + Nvidia wait
  • Tuesday Pre-Market: SPY +0.20%, QQQ +0.30% (weak bounce, hope not conviction)

SECTION 2: YOUR FINVIZ SCAN – 56% RED DISTRIBUTION

16 STOCKS, 56% RED = MICRO DISTRIBUTION VIEW

Tuesday Scan: Distribution Continuing

  • Total: 16 stocks (vs 20 normal, vs Monday 15)
  • RED: 9 of 16 (56%) – Worse than Monday 53%
  • Technology: 7 stocks (44%) – Below 40% threshold
  • No Concentration: Scattered across sectors

Technology (7 stocks): GREEN but weak

  • GREEN: SNDK +1.82%, GLW +1.19%, COHR +0.55%, TTM +0.51%, LITE +0.39%
  • RED: AAOI -5.11%, CIEN -0.27%

Basic Materials (2 stocks): 50% split

  • GREEN: CSTM +0.95%
  • RED: CENX -1.43% (Mon -3.12%, Tue -1.43% = collapsing)

Energy (2 stocks): 100% GREEN

  • OII +0.70%, VAL +0.73% (but only 13% of scan)

Healthcare/Consumer/Financial (5 stocks): Mixed

  • GREEN: VSCO +2.38%, CGON +0.43% | RED: MRNA -0.17%, XP -1.08%

SECTION 3: BROAD SECTOR ROTATION – MACRO VIEW 🔥

SPDR SECTOR ETF ANALYSIS – INSTITUTIONAL MONEY FLOWS

STRENGTHENING SECTORS (Money Flowing IN)

1. XLE (Energy) +0.8% 🔥

  • Relative Strength vs SPY: Improving (tariff chaos = energy security premium)
  • Volume Profile: Above 20-day average = Accumulation pattern
  • Key Drivers: Iran tensions + Trump tariff uncertainty = Oil demand
  • Lead Stocks in YOUR Scan: OII +0.70%, VAL +0.73% (100% green)
  • Problem: Only 2 stocks, 13% of scan = Too small to trade

2. XLV (Healthcare) -0.2% (Defensive bid FAILING)

  • RS vs SPY: Flat (money seeking safety but unconvinced)
  • Volume: Below average = No conviction
  • In YOUR Scan: MRNA -0.17%, CGON +0.43% = Mixed, no leadership

WEAKENING SECTORS (Money Flowing OUT)

1. XLB (Materials) -1.1% 💀

  • RS vs SPY: Deteriorating rapidly
  • Volume Profile: Above average = DISTRIBUTION
  • Key Headwinds: Trump 15% tariffs killing aluminum/commodity demand
  • Weak Stocks in YOUR Scan: 
  •   • CENX -1.43% (two days down: Mon -3.12%, Tue -1.43%)
  •   • CSTM +0.95% (weak bounce, trend broken)
  •   • IAG dropped out of scan (Monday -3.73% killed it)
  • Trade Signal: AVOID Materials entirely

2. XLK (Technology) -0.3% (Nvidia waiting pattern)

  • RS vs SPY: Neutral (coiled spring waiting for Nvidia)
  • Volume: Below average = Institutions on sidelines
  • In YOUR Scan: 7 stocks (44% of scan) BUT:
  •   • Small gains: GLW +1.19%, COHR +0.55%, TTM +0.51%
  •   • AAOI -5.11% = Communication equipment weakness
  •   • SNDK +1.82% = Outlier, not sector leadership

SECTOR ROTATION INSIGHTS

MICRO + MACRO CONFIRMATION: Primary Flow: Money rotating FROM Materials (XLB -1.1%) TO Energy (XLE +0.8%). Rotation Type: RISK-OFF defensive positioning. YOUR Scan Confirms: CENX -1.43% aluminum collapse matches XLB weakness. OII +0.70%, VAL +0.73% matches XLE strength. Tech 44% scattered matches XLK -0.3% waiting. MICRO scan + MACRO sectors = Complete distribution picture.

SECTION 4: 10-YEAR TREASURY & SECTOR IMPACT

  • Current Yield: 4.08% (stable, elevated)
  • Pressuring: XLU (Utilities), XLRE (Real Estate) – rate-sensitive sectors weak
  • Favoring: XLF (Financials) – higher rates = better net interest margins
  • YOUR Scan Impact: ZERO financials in scan = Confirms risk-off defensive posture

SECTION 5: TRADE DECISION – NO TRADES

NO TRADES – DISTRIBUTION CONFIRMED BY BOTH VIEWS

  • MICRO View (Your Scan): 56% RED, no concentration ❌
  • MACRO View (Sectors): XLB collapsing, XLK waiting, defensive rotation ❌
  • Score: 0 of 4 requirements = NO TRADES

SECTION 6: METHODOLOGY – 7 FOR 7

  • Mon Feb 10: 35% RED → Saved ✅
  • Tue Feb 17: 65% RED → Saved ✅
  • Wed Feb 18: 80% GREEN → Executed ✅
  • Thu Feb 19: 70% RED → Exited ✅
  • Fri Feb 20: 60% GREEN → Cautious ✅
  • Mon Feb 23: 53% RED → NO TRADES ✅
  • Tue Feb 24: 56% RED + XLB collapse → NO TRADES ✅

MICRO Scan (56% RED) + MACRO Sectors (XLB -1.1%, XLK -0.3%) = Complete Distribution Picture. Aluminum collapsing, Tech waiting for Nvidia, Energy only bright spot but too small. NO TRADES. Wednesday scan + Nvidia results = Next decision. 💪

Tuesday, February 24, 2026 – MICRO + MACRO Analysis

Your FinViz scan (MICRO) + Sector ETFs (MACRO) = Complete Picture

Unknown's avatar

Author: timothymccandless

I have spent most of my professional life helping people who were being taken advantage of by systems they did not fully understand. As an attorney, I represented consumers against predatory lending practices and worked in elder law protecting seniors from fraud. My family lost $239,145 to identity theft, which became the foundation for my seniorgard.onlime and deepened my commitment to financial education. Since 2008, I have maintained a blog at timothymccandless.wordpress.com providing free financial education. Not behind a paywall. Free, because financial literacy should not cost money. I trade with real money using the exact strategy described in this book. My current positions: Pfizer at $16,480 deployed generating $77,900 per year net. Verizon at $29,260 deployed generating $51,000 per year net. Combined: 293% annualized pace. These are my only active positions. Not cherry-picked.

Leave a comment