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- The K-shaped stock market
THE BIG IDEA
Many tech stocks, especially software stocks, got clobbered last week. Some have partially bounced back already, some didn’t. You might have heard about it.
However, the market didn’t throw the baby out with the bath water. Numerous stocks ended up having really excellent weeks. While the sexier stocks that most people actively trade had a miserable start to February, it didn’t spread to the rest of the market. Check out this survey of winners and losers for the week:
You could put Microsoft on the “Got Crushed” list too, if you want to. MSFT lost 6.77% last week after losing 7.65% the week before. The point is that the cool kids are now buying shares of a supermarket and a company that makes something called “paper” instead of the whiz-bang tech stocks.
This trend started at the beginning of the year. Among stocks in the S&P 500, the four worst performers so far in 2026 are all from the Technology sector. The thing is, the five best performers are also from the Technology sector. Go figure!
So it is not really accurate to say that all tech stocks are being abandoned. Some are doing quite well, thank you very much.
Where should we look for a trade? It depends on which part of the K you are interested in.
The lower part of the K probably is not the place where you want to go fishing for a long-term investment. However, we could get a short but powerful counter-trend rally in the stocks that have been so thoroughly beaten down.
Stocks in the upper branch of the K might also see some reversion to the mean. “Buy the dip” could work here. The best stocks of all could be the ones that don’t even dip but lie flat for a short period of rest.
SEEN ON THE INTERNETS
After a week of outsized moves in the stock market - both up and down, sometimes concurrently - it seems reasonable to hunt for something bland and boring for this week’s Seen On The Internets.
Joe Duarte overdelivered for us! 🙂 Among other things, he runs a newsletter on the Substack platform called Joe’s Weekender Portfolio.
In response to the hectic week that was, Duarte wrote this long-ish post about “Staying calm, practical, and effective.” He is a big believer in tracking the number of advancing stocks versus the number of decliners as a way of diagnosing the market’s health.
He sees the current situation in the market this way:
Liquidity is increasing or at least stable and adequate. That supports the stock market.
The options market is relatively quiet; which means no one is panicking. That’s constructive for stocks and perhaps the most notable of all factors
The market’s breadth is expanding, which means money is finding its way into the stock market despite the rout in technology.
To summarize his advice, he says to step back to look at the big picture, don’t fight the primary trend, and “follow the money”.
NUMBERS ONLY
5.30% | The Consumer Staples sector, which usually does well in times of trouble, was up 5.30% last week. |
68.6% | Despite all the recent turmoil, more than 2/3 of stocks in the S&P 500 are above their 50-day average. |
$328 billion | The total market value of NVDA rose by approximately $328 billion on Friday. Yet, the stock was still down for the week. |
SWINGEX INDEX
As of market close on: 6 February 2026
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Swingy says: Was a helluva earthquake this week. Keep your head on straight and grab a handful while you can.
Learn more about how the Swingex Index works here.
WATCHER
Stocks highlighted here each week are not recommendations to buy or sell. They are provided as ideas for swing traders to follow up on with their own research.
AIR (AAR Corp.): AAR Corp. started life way back in 1955 as Allen Aircraft Radio. The stock just hit a new high on Friday, but you would not be too late to join the party now.
There isn’t much remarkable about the chart, to be honest. The stock spent literally the entire fourth quarter of 2025 in a narrow range after teasing a big breakout at the end of September.
More recently, it has been consolidating in the $104-108 area for a few weeks. Notably, AIR has pretty much ignored the wild gyrations in the stock market and ended up shooting higher on Friday.
It’s that relative strength compared to the rest of the market that makes us think AIR will be able to power ahead in the coming days and weeks.