Master Trader ETF Investment Trader for the Week of 2-9-26

The big news of the week was the continued selloff in stocks (particularly technology, software, AI stocks, and leveraged private companies), cryptocurrencies, precious metals, and other risky assets, prior to the massive reversal on Friday. 

Bitcoin had an overnight low of almost 60,000, a huge retracement from the highs; silver made new lows, but breadth expanded, and many other sectors closed at new highs. 

The software sector selloff continued as fears that artificial intelligence and Anthropic’s Claude applications would make software less valuable.

Dip buyers returning on Friday (which negated a Thursday night overnight selloff) with a huge bounce/reversal in the broader markets. It was a bullish “gap and go” day on Friday.

On Friday alone, the Dow closed over 50,000 for the first time ever, soaring more than 1,200 points, a huge 2.5%.  The S&P 500, Nasdaq, and IWM jumped 2% 2.2%, 3.58%, respectively.  The equal-weighted S&P exchange-traded fund (RSP) closed at a record on Friday.

Alternative asset managers such as BX, KKR, APOL, OWL, and ARES have also gotten hammered on the AI/software selloff.    The private credit industry serves as a private version of the junk bond market, making loans to highly leveraged private companies at higher interest rates.

This week, we have bullish stock and options trading ideas on iShares Expanded Tech-Software Sector ETF (IGV), which is a Climactic Buy Setup and a +180 reversal on +Vol., along with similar-looking stocks and ETFs.

The political drama continues with a looming partial government shutdown over funding of DHS/ICE.

The S&P 500 has identified 6,800 as an important reference level. The bounce from that area was expected. What happens after the bounce will matter far more. The S&P 500 did not reach an all-time high, and this week we will see whether it does.

Market internals remain neutral, indicating no confirmed bearish trend is in place. However, breadth has weakened, and leadership remains fractured. Those conditions argue for caution, not complacency.

Volatility has increased, correlations have shifted quickly, and headline sensitivity remains elevated. That combination tends to reduce the number of high-probability setups—especially for swing traders.

And that’s okay.

The Discipline This Market Demands

This is not a market that rewards:

• Chasing rebounds
• Assuming support guarantees upside
• Confusing volatility with opportunity

It does reward:

• Letting price confirm direction
• Respecting Major Support and Resistance
• Understanding rotation rather than fighting it
• And being willing to Sit On Hands (SOH) when conditions are not favorable

High-quality opportunities still exist—but they are fewer, more selective, and require more patience than most traders are comfortable with.

The Bottom Line

Last week delivered a powerful reminder: markets can move from complacency to panic—and back again—far faster than most participants expect.

Key levels mattered. Capitulation occurred. Rotation followed. And now, the market is trying to decide whether that was a reset or merely a pause.

We remain cautiously optimistic but disciplined.

As always, we will let price, structure, and confirmation guide our decisions—not fear, not headlines, and not the fear of missing out.

Superbowl Sunday is 2-8-26, so volume might be lighter tomorrow morning as many football fans might be sleeping in (smile).

Nothing changes in how we operate. We will continue to trade the same price patterns, manage risk the same way, and let the market—not opinions—tell us when opportunity is present.

If you're not in the Green Room with us, log in to YouTube, Facebook, or Twitter to get our pre-market review at 9 AM ET. If you can't make it, you can view the recording.

Good trading.

TREND MATRIX

The Trend Matrix has many mixed messages.

Last week delivered one of the wildest reversals we’ve seen in some time, and it also highlighted one of the widest divergences in the market.

Technology—led by software—continues to unravel, while defensive Consumer Staples have surged from bear-market lows to bull-market highs.

At the same time, Dow Theory remains bullish, with both the Dow Industrials and Dow Transports at new all-time highs, even as the NASDAQ 100 broke its short-term uptrend last week.

Historically, there has never been a sustained bull market where these three economically critical, heavily weighted sectors were all weak at the same time.

Has AI changed history? Nothing changes history - the past, but it is changing the future.  Video below.

S&P Sector ETFs – Sorted by Weekly Percent Change

Other ETF Sectors – Sorted by Weekly Percent Change

VIDEO REVIEW OF ETF SECTORS - Click lower right to open Full Screen.

NEW ETF TRADE IDEAS

2/9:  iShares Expanded Tech-Software Sector ETF (IGV) – Over $83.93, consider buying a ½ lot of the ETF. Climactic Buy Setup and +180 reversal on +Vol. Stop $76.48.

2/9:  iShares US Aerospace & Defense ETF (ITA) – Over $235.38, consider buying the ETF. Buy Setup and reversal at the 20-MA, bullish weekly/monthly.  Stop $221.11 (50-MA).

2/9:  iShares Bitcoin Trust ETF (IBIT) – Over $40.57, consider buying a ½ lot of the ETF. Climactic Buy Setup and +180 reversal on +Vol. Stop $33.46.

2/9:  Invesco S&P 500 Eql Wght ETF (RSP) – Over $202.49, consider buying the ETF.  +WRB Breakout to all-time highs at the 20-MA. Stop $196.24.

2/9:  Pacer US Small Cap Cash Cows Index (CALF) – Consider buying a ½ lot of the ETF on a pullback between $46.40 – 46.60.  +WRB Breakout to all-time highs at the 20-MA. Stop $44.54.

2/9:  Global X FinTech ETF (FINX) – Over $24.73, consider buying a ½ lot of the ETF. Climactic Buy Setup and +180 reversal on +Vol. Stop $22.09.