Weekly Market Intelligence Brief — 07 Feb 2026

🎭 Theme of the Week: Reflation Rotation Accelerates

• Sharp bull% surges in industrials, airlines, small-caps and consumer cyclicals confirm momentum leadership

• Mild trimming in staples, mega-caps and select energy names reflects capital reallocation

• Persistent negative MVI across large-, mid- and small-caps keeps long-term valuation tension elevated

📰 Key Market Influencing News (Last Week)

• ISM Services PMI beat expectations while manufacturing softened, reinforcing a “Goldilocks-with-reflation” narrative

• Cyclical sectors (industrials, materials, consumer discretionary) outperformed defensives in earnings season wrap

• Fed speakers reiterated data-dependent stance; markets priced in two cuts for 2026 with no urgency

• Easing geopolitical rhetoric and stable energy prices supported risk-on flows into small-caps and commodities

🏛️ Stock Quadrant Overview

🟢 Accumulation

• CSL +66.5 [🚀] → Industrial conglomerate riding broad reflation demand tailwinds

• DAL +64.1 [🚀] → Airline traffic rebound on economic optimism and leisure recovery

• MMM +63.6 [🚀] → Diversified manufacturing margins expanding in cyclical upswing

• MGM +59.0 [🚀] → Gaming resorts benefiting from consumer discretionary spending

• SHAK +57.3 [🚀] → Fast-casual dining volumes resilient amid rotation

🔵 Rotation into Position

• WYNN +19.5 → Luxury casino operator attracting high-end risk-on flow

• UUP +16.8 → USD gaining on relative strength rotation

• MRVL +16.2 → Chip designer positioned for AI infrastructure build-out

• QUAL +14.2 → Quality factor stocks entering favored positioning

• COIN +12.5 → Crypto platform riding broader risk appetite

🟡 Rotation out of Position

• CL -9.0 → Staples trimming as capital rotates to cyclicals

• MCHP -9.0 → Semiconductor names seeing profit-taking

• PPG -9.1 → Coatings/materials facing rotation outflows

• FLG -9.8 → Regional financials exiting positions

• GILD -9.8 → Biotech defensives under distribution

🔴 Liquidation

• MSCI -62.9 → Index analytics facing heavy unwinds

• RMBS -59.5 → Mortgage REITs in forced liquidation

• AMT -59.5 → Cell tower operator pressured by rates

• URA -55.7 → Uranium miners hit by sector rotation

• MAGS -54.8 → Leveraged mega-cap ETF seeing outflows

📊 ETF Quadrant Overview

🟢 Accumulation

• XRT +53.0 [🚀] → Retail ETF surging on consumer reflation

• XLV +43.8 [🚀] → Healthcare providers gaining breadth

• IWM +42.4 [🚀] → Small-caps leading rotation

• ITB +39.4 [🚀] → Homebuilders on housing cycle upswing

• DBA +34.9 [🚀] → Agriculture commodities in reflation play

🔵 Rotation into Position

• UUP +16.8 → USD ETF in defensive rotation

• QUAL +14.2 → Quality factor ETF attracting flows

• ETHA +8.6 → Ethereum exposure for risk-on tilt

🟡 Rotation out of Position

• NOBL -0.6 → Dividend aristocrats seeing mild trimming

• USO -0.9 → Oil ETF in energy rotation out

• DBC -1.1 → Commodities basket distribution

• XLE -1.3 → Energy sector profit-taking

• VOO -1.6 → Broad S&P ETF light outflows

🔴 Liquidation

• URA -55.7 → Uranium ETF heavy liquidation

• MAGS -54.8 → Mega-cap ETF unwind

• XLC -41.6 → Comm services under pressure

• SLV -35.4 → Silver ETF selling

• EWC -26.7 → Canada ETF outflows

🌐 Macro Regime & Valuation Context (07 Feb 2026)

📈 Market Valuation Index (MVI) – Medium- to long-term valuation view:

SPY -0.72 🔴 | QQQ -1.06 🔴 | IWM -1.63 🔴 → all red, medium-term overvaluation; small-caps most stretched.

💹 Medium-Term Risk ON/OFF – Medium-term flow & positioning:

Bull 59.4% 🟢 + Health_bull 50.0% 🟢 → bullish confirmed (both green, aligned risk-on).

⚠️ MVI vs. Medium-Term Risk ON/OFF Discrepancy:

In a healthy market both are aligned in a bullish way; MVI can diverge from Medium-Term Risk ON/OFF, but this is a clear bubble warning sign that will require resolution through stock market correction, lower interest 10Y TSY rates or higher earnings.

🌤️ Seasons – Short- to medium-term leadership & composition:

Goldilocks 60.0% 🟢 (Reflation 68.6% 🟢) → dominant short-term risk-on with cyclical bias; examples visible in airlines, industrials, homebuilders and small-caps. Macro Regimes (Seasons) need to align as well but can lag for a while in a healthy market; divergence = increased risk.

🔄 Portfolio Rotation (LgCaps) – Short- to medium-term flow dynamics:

Rotation into Position 17.8% 🔵 dominant → still bearish but cautious nibbling; SPX >6,900 continues to hide ongoing profit-taking in mega-caps.

Cross-context ⚡:

Short-term Seasons show strong reflation leadership aligning with medium-term gamma risk-on, yet long-term valuation pressure (MVI) remains elevated across the board. The current setup is constructive for cyclicals but vulnerable to any catalyst that forces valuation reconciliation.

Conclusion 🎯:

Maintain selective long bias in reflation/cyclical themes (industrials, small-caps, commodities), monitor 50% gamma health level closely, and prepare for potential volatility around March OPEX.

Quick Glossary

• bull% — Positioning & Flow Trend Indicator (full explanation + live charts: https://reflectionsofreality.substack.com/p/access-to-our-bull-charts)

• MVI — Market_Valuation_Index or Equity Valuation Pressure Index (full explanation: https://reflectionsofreality.substack.com/p/market_valuation_index)

• Medium Term Risk ON/OFF — Avg. lg. Cap Price Positioning within the Call-Put-Frontier Range

• Medium Term Risk ON/OFF: Health — lg. Cap Market Breadth of medium term Machine Learning model

• Macro Regimes — “Seasons”: Goldilocks: Strong growth, low inflation → best: stocks/tech/credit | worst: USD/vol/gold Reflation: Rising growth, rising inflation → best: cyclicals/commodities | worst: bonds/defensives Stagflation: Weak growth, high inflation → best: defensives/gold/vol | worst: equities/credit Deflation: Contracting growth, falling inflation → best: bonds/USD | worst: stocks/commodities

Legend

[🚀] = Bull Trendfollowing Triggered (only in Accumulation if bull% >70%)
🟢 + 🟡 = Risk-On | 🔴 + 🔵 = Risk-Off