Yesterday’s session had several narratives masked by an innocuous move higher. More buyers in the software patch are assuming these multibillion-dollar businesses will not go gently into that artificial intelligence (AI) night.

Heat Map & Market Breadth

By the same token, buyers making a move on “Mag Seven” names, assuming these multibillion-dollar businesses will not go gently into that AI skepticism night.

Financials (XLF) looked great across the board, and most utility (XLU) names climbed in the aftermath of that nationwide storm.

However, 63% of the names in the S&P 500 (SPX) finished higher in the session. That was the best of any index.

Breadth on the New York Stock Exchange (NYSE) and NASDAQ was virtually even, except for the new highs-to-new lows ratio.

Flipping the Script

In the 1960s, DC Comics introduced “Bizarro World,” where everything was the opposite of Earth.

2026 - The Opposite

This year, the stock market has “flipped the script,” the smaller the stock, the greater the gains.

Micro-cap stocks are crushing it at the top, and the mighty “Mag Seven” is struggling. I have not read anything earth-shattering into this, considering the massive rallies enjoyed by prominent names over the past three years. I’m surprised the financial media hasn’t railed against this as a sign of Armageddon.

Then again, they are busy watching a different proxy for the end of time.

Gold Glitters & Silver Soars

Gold is crushing it, and most tie the move in with feckless government spending and debt. But the move didn’t occur until Russia was removed from the Swift system, and foreign central banks began loading up on gold to insulate themselves from a similar situation. A popular narrative is that the gold spurt reflects anxiety about geopolitical uncertainty.

But there is always geopolitical uncertainty, and I think it's been at higher levels in recent years without sparking a similar run. On that note, I think a large part of the current move is a form of mania. The market is ruled by short-termism. The ‘greater fool theory’ is at work. It is not to say that gold won’t move higher in the years ahead. It will because governments will never stop reckless spending and debt.

But it's ahead of itself for the moment.

Silver is Surfing the Big Wave

Yesterday, the iShares Silver Trust ETF (SLV) traded a record $32 billion, or 15 times its daily average volume. There was a monster spike in price, then much of it was given back. There are many reasons silver could rally, but the move since last summer has been parabolic. Still, I wouldn’t sell my bars or coins because I think they'll go higher in the long term. I have always felt that way, and it took years before leaving the launching pad.

Practicality Loses Again

Just about every intelligent professional investor I know came into 2026 convinced that health care would rock, and that UnitedHealth Group (UNH) would lead it. We had it in the model portfolio, but it stalled and looked vulnerable, so we took profits. The stock got hammered in after-hours trading on the word that the administration will keep Medicare reimbursement rates flat next year.

Today’s Session

Earnings are coming in, and most are better than expected, and some are even moving stocks higher (see General Motors (GM)), but the session will start off cautiously optimistic.

Interestingly, some Wall Street sentiment indicators suggest there is too much bullishness.  I do not see that at all. There is a pocket of money chasing the hottest plays out, but that has always existed, though to a lesser extent.

Watch software stocks today, with CrowdStrike (CRWD) popping at the start of trading.

The AI trade beyond picks and shovels is compelling as well.

Comments

Charles, I just want to say THANK YOU! I read your book and took your class. Needles to say, I'm up 79% YTD. My positions have been mainly in the material sector (GDX, GLD, SCCO, CENX) to say a few but I am killing it and I thank you! Mark Peterson on 1/27/2026 6:15:16 PM

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