MORNING MARKET COMMENTARY

MOMENTUM SCAN + SECTOR ROTATION ANALYSIS

MORNING MARKET COMMENTARY

MOMENTUM SCAN + SECTOR ROTATION ANALYSIS

Friday, February 28, 2026 – False Signal

Timothy McCandless – Protected Wheel Strategy

đź’€ FALSE SIGNAL: Your scan: 68% GREEN (13/19) BUT only 19 stocks (vs 20 normal) = SHRINKING universe. QQQ -0.4%, SPY -0.2%, XLK -0.1%. Your scan shows EXCEPTIONS (survivors), not market reversal. Healthcare -0.6% (TXG -3.87%), Energy -0.5% (OII -2.18%, NRG -1.15%). CIEN +2.44%, GLW +1.40% = Relative strength in dying market. NO COLLAR TRADES. Wait for scan to expand to 30-40 stocks with 70%+ GREEN = Real accumulation. This is survivor bias, not recovery.

SECTION 1: MARKET OVERVIEW – STILL WEAK

Broad Market Indices

  • SPY (S&P 500): ~$690 -0.2% (still under pressure)
  • QQQ (Nasdaq-100): ~$604 -0.4% (third day of selling)
  • Russell 2000: ~$2,655 -0.4% (small caps weak)
  • VIX: 19.8 (elevated, fear persisting)
  • 10-Year Treasury: 4.08% ↓ from 4.12% (only positive)

3-DAY PROGRESSION: Wed: QQQ -0.4% (post-Nvidia) | Thu: QQQ -0.6% (distribution) | Fri: QQQ -0.4% (still selling). No reversal. 10-Year dropping (4.08%) not enough to offset selling pressure. This is distribution day 3.

SECTION 2: YOUR SCAN – SURVIVORS, NOT LEADERS

19 STOCKS (SHRINKING): 13 GREEN (68%), 6 RED (32%)

The Critical Insight:

  • Wednesday: 20 stocks, 65% RED = Distribution
  • Thursday: 20 stocks, 65% RED = Distribution
  • Friday: 19 stocks (↓), 68% GREEN = Universe SHRINKING

THE TRAP: 68% GREEN looks good BUT you lost 1 stock from your scan. When market is strong, your scan EXPANDS to 30-40 stocks with 70%+ GREEN. When market is weak, scan SHRINKS to 15-20 stocks. Friday: 68% of a SMALLER pool = SURVIVOR BIAS, not accumulation. These 19 are the last ones standing, not leaders of recovery.

TECHNOLOGY (7 stocks, 37%) – Selective Strength

GREEN (5 of 7):

  • CIEN +2.44% $349.48 – Communication equipment outlier
  • LITE +1.85% $689.53
  • COHR +1.54% $253.99
  • GLW +1.40% $152.40
  • AXTI +0.36%

RED (2 of 7):

  • KEYS -0.84%, FORM -1.16%

What This Really Means:

  • 71% tech GREEN = 5 of 7 survivors, not broad tech recovery
  • CIEN, GLW, LITE, COHR = Communication equipment niche
  • Most tech stocks (semiconductors, software, mega-caps) still selling

OTHER SECTORS – Confirms Weakness

INDUSTRIALS (2 stocks):

  • FTAI +1.48%, BE -1.96% = 50% split, no conviction

BASIC MATERIALS (3 stocks):

  • CDE +0.04%, HBM +0.11%, AA -0.84% = Tiny gains, weak

HEALTHCARE (3 stocks) – WEAK:

  • TXG -3.87% (getting crushed)
  • MRNA -0.18%, ELAN +0.13% = Weak

CONSUMER (2 stocks) – 100% RED:

  • ASO -2.10%, YOU -0.86%

ENERGY/UTILITIES (2 stocks) – 100% RED:

  • OII -2.18%, NRG -1.15%

SECTION 3: SECTOR ROTATION – CONFIRMS DISTRIBUTION

SPDR SECTOR ETF ANALYSIS – NO RECOVERY

SECTOR PERFORMANCE (Friday)

XLK (Technology) -0.1%

  • 3-Day Total: -1.5% (Wed -0.8%, Thu -0.6%, Fri -0.1%)
  • Volume: Still above average = Distribution continuing
  • YOUR Scan vs Reality: 
  •   • Your scan: 71% tech GREEN (CIEN +2.44%)
  •   • XLK: -0.1% = Most tech still RED
  •   • Your stocks = EXCEPTIONS, not sector trend
  • Signal: NO accumulation in tech sector

XLV (Healthcare) -0.6%

  • YOUR Scan Confirms: TXG -3.87%, MRNA -0.18%
  • Signal: Healthcare selling

XLE (Energy) -0.5%

  • YOUR Scan Confirms: OII -2.18%, NRG -1.15%
  • Signal: Energy/utilities weak

XLY (Consumer Discretionary) -0.4%

  • YOUR Scan Confirms: ASO -2.10%, YOU -0.86%

XLI (Industrials) -0.2%

  • YOUR Scan: FTAI +1.48% = Outlier, sector still weak

MICRO vs MACRO DISCONNECT: Your scan (68% GREEN) shows EXCEPTIONS. Sectors (XLK -0.1%, XLV -0.6%, XLE -0.5%) show REALITY = Broad selling. When your scan and sectors DISCONNECT = Trust sectors. Your 19 stocks are survivors in dying market, not leaders of recovery. This is LATE-STAGE distribution where only strongest names hold up temporarily.

SECTION 4: 10-YEAR TREASURY – ONLY POSITIVE

  • 4.08% ↓ from 4.12% = Only bullish factor
  • Problem: Even with yields dropping, QQQ -0.4%, SPY -0.2% = Selling overwhelming

SECTION 5: COLLAR OPPORTUNITIES – NONE

NO COLLAR TRADES – SURVIVOR BIAS, NOT RECOVERY

  • CIEN +2.44%: Outlier in XLK -0.1% sector = Trap
  • FTAI +1.48%: Outlier in XLI -0.2% sector = Trap
  • GLW +1.40%: Will get dragged down with XLK

SECTION 6: WHAT TO WATCH MONDAY

Signs of REAL Reversal:

  • Scan Expands: 30-40 stocks meeting criteria (not 19)
  • 70%+ GREEN: In LARGER pool
  • QQQ Positive: +0.5% or more
  • XLK Positive: +0.5% or more
  • Broad Tech Recovery: Not just communication equipment niche

SECTION 7: BOTTOM LINE

FALSE SIGNAL: Your 68% GREEN = Survivor bias, not recovery. 19 stocks (shrinking) vs 30-40 (expanding market). QQQ -0.4%, XLK -0.1% = Sectors confirm distribution. NO TRADES. Wait for Monday: scan expands to 30-40 stocks + 70%+ GREEN + QQQ/XLK positive = REAL accumulation. Trust MACRO sectors over MICRO exceptions. đź’Ş

Friday, February 28, 2026 – Distribution Day 3

Scan shows survivors, not leaders. Trust the sectors.

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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.

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