DAY 2 POST-NVIDIA + SECTOR ROTATION ANALYSIS

MORNING MARKET COMMENTARY

DAY 2 POST-NVIDIA + SECTOR ROTATION ANALYSIS

Thursday, February 27, 2026 – Distribution Continues

Timothy McCandless – Protected Wheel Strategy

💀 EXECUTIVE SUMMARY – DISTRIBUTION DAY 2: Your scan: 65% RED (13/20), tech 50% (10/20) but 90% RED (-2% to -4.9% moves). XLK (Tech) -0.6%, XLI (Industrials) -0.5% confirming weakness. Only 3 stocks green: RNG +6.24%, UAL +2.77%, VSCO +3.31%. NO COLLAR TRADES – Distribution persists. 10-Year 4.12% = Silent Killer rising. 6:40 AM Watch: Does tech stabilize or break lower? Friday scan critical. DECISION: STAY OUT.

SECTION 1: MARKET OVERVIEW – DISTRIBUTION PERSISTS

Thursday Indices: Two Days of Selling

• SPY (S&P 500): ~$691 -0.3% (slowly grinding lower)
• QQQ (Nasdaq-100): ~$606 -0.6% (tech weakness continuing)
• Russell 2000: ~$2,660 +0.1% (small caps holding up = rotation)
• VIX: 19.8 (elevated, fear persisting)
• 10-Year Treasury: 4.12% ↑ – THE SILENT KILLER RISING (was 4.10% yesterday)

CRITICAL: 10-Year yield RISING (4.10% → 4.12%) while tech selling continues = Double headwind. Nvidia beat didn’t matter Wednesday (-2.4%), tech still red Thursday. This is NOT profit-taking, this is DISTRIBUTION. Institutions rotating OUT of tech into defensives.

SECTION 2: YOUR FINVIZ MOMENTUM SCAN – 65% RED

20 STOCKS: 13 RED (65%), 7 GREEN (35%) = DISTRIBUTION DAY 2

Scan Statistics:

• Total: 20 stocks (momentum criteria met)
• RED: 13 of 20 (65%) 💀 = SAME as yesterday
• GREEN: 7 of 20 (35%) = Improved from 1 green Wed, but weak gains
• Technology: 10 of 20 (50%) = Still dominant concentration
• Problem: 9 of 10 tech RED (90%) – Tech concentration = BEARISH

TECHNOLOGY (10 stocks, 50%) – 90% RED 💀

RED STOCKS (9 of 10):

• LITE (Lumentum): -4.61% $690.01 – Communication equipment, $49B cap
• COHR (Coherent): -4.19% $256.68 – Scientific instruments, $48B cap
• CIEN (Ciena): -3.91% $339.52 – Communication equipment, $48B cap
• TTM (TTM Tech): -3.23% $105.34 – Electronic components
• GLW (Corning): -3.06% $155.52 – Electronic components, $133B cap (largest)
• AAOI (Applied Opto): -2.19% $56.85
• VSAT (Viasat): -1.71% $46.85 – Communication equipment
• ST (Sensata): -0.71% $37.59 – Scientific instruments
• Total: 9 tech RED = -2.0% to -4.6% range

GREEN STOCKS (1 of 10):

• RNG (RingCentral): +6.24% $36.63 – Software application, ONLY tech green

TECH SIGNAL: 50% concentration BUT 90% RED = WORST possible combination. Tech dominates your scan but ALL selling. RNG +6.24% is outlier (software vs hardware). Hardware/components/communications ALL red 2 days straight. This is sector breakdown, not stock picking opportunity.

INDUSTRIALS (2 stocks) – 50% SPLIT

• UAL (United Airlines): +2.77% $116.00 – Airlines/industrial
• BE (Bloom Energy): -4.86% $166.27 – Electrical equipment

UTILITIES/HEALTHCARE (3 stocks) – 33% GREEN

• MRNA (Moderna): +0.71% $51.74 – Biotech defensive
• NRG (NRG Energy): -3.23% $177.66 – Utilities
• ELAN (Elanco): -0.61% $26.67 – Animal health

CONSUMER/FINANCIAL/MATERIALS/ENERGY (5 stocks)

• VSCO (Victoria’s Secret): +3.31% $64.21 – Consumer cyclical
• MOD (Modine): -2.25% $225.00 – Auto parts
• OII (Oceaneering): -2.43% $37.00 – Oil & gas equipment
• XP (XP Inc): -1.88% $21.92 – Brazilian financial
• HBM (Hudbay): -0.83% $27.48 – Copper
• DNLI (Denali): -2.56% $21.72 – Biotech

SECTION 3: BROAD SECTOR ROTATION – TECH BREAKDOWN 🔥

SECTOR ETF ANALYSIS – TWO DAYS OF TECH SELLING

WEAKENING SECTORS (Continued Selling)

1. XLK (Technology) -0.6% 💀 (Wed -0.8%, Thu -0.6%)

• 2-Day Performance: -1.4% total (Wed -0.8% + Thu -0.6%)
• RS vs SPY: Deteriorating FAST
• Volume: ABOVE average both days = DISTRIBUTION
• YOUR Scan Confirms: 
•   • 9 of 10 tech RED (LITE -4.61%, COHR -4.19%, CIEN -3.91%)
•   • Only RNG +6.24% green = Outlier, not trend
• Trade Signal: AVOID tech entirely until XLK positive + <40% RED scan

2. XLI (Industrials) -0.5%

• YOUR Scan: BE -4.86% = Weakness, UAL +2.77% = Mixed signal
• Signal: Cyclical uncertainty

NEUTRAL/DEFENSIVE SECTORS

1. XLV (Healthcare) +0.2% (Defensive Hold)

• YOUR Scan: MRNA +0.71% confirms, but weak gain

2. XLP (Consumer Staples) +0.3%

• YOUR Scan: VSCO +3.31% strong but consumer discretionary, not staples

SECTOR ROTATION INSIGHTS

MICRO + MACRO PERFECT ALIGNMENT DAY 2: Primary Flow: Tech distribution CONTINUES (XLK -1.4% 2-day). YOUR scan: 90% tech RED confirms. Rotation: AWAY from growth (tech) toward CASH (10-Year 4.12%). No defensive sector strong enough to lead = Market in limbo. This is distribution phase, not rotation. Wait for new leadership to emerge before trading.

SECTION 4: 10-YEAR TREASURY – SILENT KILLER RISING

4.12% ↑ FROM 4.10% – GETTING WORSE

• Wednesday: 4.10% + Nvidia beat = Tech still fell
• Thursday: 4.12% + No catalyst = Tech falling more
• Signal: RISING yields = More pain for tech ahead

WHY THIS KILLS TECH: Every 0.1% rise in 10-Year = ~3% drop in tech valuations (DCF math). 4.12% means tech multiples 12% lower than at 3.7% yields. Even perfect earnings (Nvidia) can’t overcome this math. Until 10-Year drops below 4.0%, tech will struggle.

SECTION 5: COLLAR OPPORTUNITIES – STILL NONE

NO COLLAR TRADES – DISTRIBUTION CONTINUING

• RNG +6.24%: Outlier in sea of RED, wait for confirmation
• UAL +2.77%: Cyclical risk too high with XLI -0.5%
• VSCO +3.31%: Consumer discretionary weak in risk-off

SECTION 6: 6:40-9:00 AM INSTITUTIONAL FLOW

• Watch: Does tech stabilize or break lower?
• QQQ $606: Key support, break = more downside
• VIX 20: Above = fear spike

SECTION 7: BOTTOM LINE – YOUR EDGE

NO TRADES – FRIDAY SCAN CRITICAL

• Edge: Your scan + sectors = Perfect agreement on distribution
• Friday Plan: Run scan, look for <40% RED + tech positive
• Week: 2 distribution days = Stay out until clear

Two days of distribution: 65% RED both days, tech -1.4% 2-day, 10-Year rising to 4.12%. NO TRADES. Trust the methodology. Friday scan will show if trend reverses. 💪

Thursday, February 27, 2026 – Distribution Day 2

MICRO scan + MACRO sectors = Stay out