Feb 9 – Feb 13, 2026
Rotation to Defensive Names Continues
by Nick Schmidt · February 15, 2026
Growth stocks are not favorable right now. They're getting beat down and the money is rotating into boring cyclical groups like energy, industrials, materials, homebuilders, and transports. This is not an environment where big money is made as a growth trader.
Going through things last weekend the rotation was obvious. The thinking coming into this week was that there's some opportunity in these boring groups if you're trying to be active at all and if the rotation continues it's possible they have big multi-month trends. But the overall environment is going to remain choppy until growth participates and a strong bull market needs growth stocks leading. So I stepped back in cautiously focused entirely on cyclical names and character changes buying only on weakness near tight stops.
Monday and Tuesday I found really good quiet entry opportunities in some of the names from these groups I was watching. The entries were tight enough that I was able to get almost full sized positions on with less risk than a normal pilot position which felt great. One of them ENPH was stopped out but so far ET an oil and gas name and LYB a materials name are working. Even though they're working for now the environment remains choppy and Thursday with 83% of stocks moving lower was a reminder that even if entering cyclical names buying strength is not an option.
I'm ending the week with 3 positions at 36% exposure heading into a long weekend. Thursday's action looked like money was starting to come out of even the cyclical groups which if it continues means money is leaving the market completely and we get a full blown correction. Friday strength returned so the rotation is still alive for now. Honestly a full correction would be the fastest way to rip the bandaid off and get back to a really good environment. But until that happens or growth starts participating we're stuck in the chop.
Current Holdings
36% invested|64% cash
SymbolAvg CostLastP&L
ET15%
$17.80$18.74+5.30%Avg $17.80Last $18.74
Energy name bought Monday on weakness. Buyers stepped in behind me and it had a strong weekly candle. Feels like real momentum.
TSLA15%
$410.35$416.63+1.50%Avg $410.35Last $416.63
On its 5-year base pivot and 30-week. Showing relative strength while growth names break down. If growth turns this leads.
LYB6%
$55.67$57.61+3.50%Avg $55.67Last $57.61
Material name with early character change. Trimmed Thursday on broad weakness.
Mostly defensive. Down from 4 positions to 3 after ENPH stopped out Thursday.
Day by Day
Monday
—Foot in the Door2026-02-09Opened flat and I put my foot back in the door with three positions all on tight entries. TSLA at $410 right on the 30-week and 5-year base pivot, ET in energy using last week's wick low as the stop, and a small ENPH which was sitting in a tight range after its biggest volume gap in over a year. Every entry was on weakness or a quiet spot which was exactly the discipline I wanted coming off the cash reset.
BoughtTSLA (~15% at ~$410 on 30-week/5-year base pivot), ET (~15%, energy name on weakness), ENPH (~10%, character change on biggest volume in a year)
Real-time posts from this day (3)
Tuesday
—Character Change Season2026-02-10Added LYB a material name showing an early character change. There are a lot of beaten down cyclical names that are displaying signs of a new trend and these character changes are seeing follow through which is really confirming because we've had a market without follow through for months so when you start seeing it in a group like these cyclicals it makes you want to focus there. Solar and homebuilders are both clear themes on the weekly but yesterday solar was strong and homebuilders were weak and today it flipped. Both groups are still a theme despite the day to day chop which is further confirmation you absolutely cannot buy strength.
BoughtLYB (~10%, material name with early character change)
Real-time posts from this day (3)
Wednesday
—Good News Sold Into Again2026-02-11The jobs report came in looking positive where it was supposed to be good news and the market gapped higher and then was sold into which is just a sign of distribution a reason we don't chase morning gap ups and a weak sign for the market. Growth continued to break down and former tech leaders are still in a downtrend. GOOGL fell below its base pivot. The only groups moving higher were oil and gas and materials. Partial stops hit on ENPH but I was still long the original portion.
SoldENPH (Partial stops hit, still long original portion)
Real-time posts from this day (3)
Thursday
—83% Down Day2026-02-1283% of stocks moved lower which was one of the worst intraday readings I can remember. Even materials and industrials that had been running started seeing pressure. ENPH got stopped out completely and LYB partial stops hit trimming it from 10% to 6%. QQQ was back to the 30-week and if the lower wick of last week's candle gets taken out I think we fully correct. Another reminder you cannot buy strength in this market at all.
SoldENPH (Remaining stops hit, fully out), LYB (Partial stops hit, 10% down to 6%)
Real-time posts from this day (3)
Friday
—Déjà Vu Bounce2026-02-13Felt like exact déjà vu of the prior Friday. QQQ on the 30-week again, 66% of stocks higher early, but it just felt like a bounce and nothing more. No stops hit which was good but I had zero interest adding exposure going into a 3-day weekend remembering how convincing the prior Friday bounce was before it completely faded. ET had another strong day with real momentum behind it. Homebuilders following through too.
Real-time posts from this day (3)
Lessons
01
Context beats setup every time
The ugliest chart you can imagine has a better chance of working in a good market than the perfect setup in a bad market. Right now growth stocks are selling off and there's a lot of uncertainty and risk off signs and the wind is just not at our back especially in growth. Like last year there are windows in the market where the odds are heavily in your favor and you want to push and there are windows where it's not and even if there are opportunities in this environment it's still difficult mode. It's not one of those windows like we had last year where you could be sloppy with risk management and the market forgives you and sometimes even rewards you. In a bad market even if you do everything right it's still really difficult.
Rule:The M in CANSLIM is the most important letter. Pay attention to the environment first. If the market is not healthy even the best setups will fail.
02
Size based on feedback not conviction
How much I risk has nothing to do with how confident I am in a trade. My performance and feedback on recent trades is what determines size. This year I've been stopping out more frequently and gains on winners have been small so my sizes are lighter than normal. Last year I built the 90% TSLA position over 2 months on tight entries where total account risk was similar to a normal 25% position. The size was a byproduct of good entries not a decision to bet big.
Rule:Let your recent results determine size not your conviction. If you've been chopping around the market is telling you to stay small. Scale up when things are working.
03
Follow through confirms theme development
When you see multiple stocks in a group all with similar setups and they're all seeing follow through at the same time that's a sign of developing theme and rotation. It's not just one name it's the whole group confirming. Homebuilders were a perfect example this week where TOL DHI and PHM all had weekly setups that were following through together which tells you the money flow is real and not just a one off.
Rule:Don't just watch one name watch the group. When you see follow through across multiple stocks with similar setups that's confirmation of a real theme developing.
Trade Walkthrough — ET
Using last week's wick low to manage risk
Wick LowWeakness Entry
The technical I'm using on this ET position to manage risk is last week's wick low. Normally I would always wait for price to push through the close of the prior week when it looks like this but I've discovered over time that the low of the wick is a good level to use if you want to try to get involved a bit earlier. Since this was an energy name I was watching from over the weekend and it was sitting tight above that level I felt it was quieter and off the radar here which should help improve my chances in this current environment.
Takeaway:When there's a big lower wick, especially on a shakeout candle, the low of that wick is a level I always come back to because someone was willing to step in there hard enough to create it. I use it as my stop on new entries and it's one of the more reliable spots I've found for defining where you're wrong.