Transcript:

Caroline WoodsAfter a volatile week for stocks and crypto, all eyes are on what comes next. Joining us now to preview the week ahead is Jay Woods, chief market strategist at Freedom Capital Markets. Jay great to have you here at the desk.

Jay WoodsGreat to be back.

Caroline WoodsAll right. So before we take a look at the week ahead, let’s talk about the week that was we saw Total Tech wreck software meltdown. We saw Bitcoin down to 60 K. It has since rebounded. We had the Dow hitting 50,000 an all time high. Is that healthy market rotation or is it maybe the start of something bigger breaking.

Jay WoodsYeah we’re getting some mixed signals. So you have to kind of break it down. You have 17% of the S&P 500 making new highs, 3% making new lows. But in that 3% are those big software names, some of those tech names that have a lot of weight on the market. Then you have all those crypto related assets and those crypto related stocks that, you know, really took it on the chin.

Jay WoodsSo the market breadth overall very healthy. But when you have those big headline stocks getting hit and not allowing that market, the rally S&P was down 0.01% last last week. But the Dow made new highs. You have to look under the hood. And where’s the leadership. And at staples industrials energy and small caps. Not a bad thing. But the tide is not lifting all boats.

Jay WoodsIt’s rotating and rotating in the names that are late cycle bull market leaders. And the concern is is this early cycle bull market or it’s just a quick change. And then we’ll refresh the tech side in the coming weeks or months.

Caroline WoodsWell what’s your call. Well late cycle or is tech going to play catch up.

Jay WoodsI think tech will play catch up. We’ll have some relief rallies as we tape this. We’re getting a relief rally in some of those software names that have been beaten down. But we’ve seen cycles like this over time over the last 25 years. It’s happened twice around 2004 and then 2000, 13, 14, after two, three big years of double digit gains in the index, we had a year where we were only up marginally less than 5%, 1 to 5% in oh five and again in, for 18 to sorry, 14 to 15.

Jay WoodsSo to me, what we’re doing is digesting gains, rotating into sectors that won’t have that power to really give us big gains as an index. But if you’re a good manager of your asset, you’re rotating into staples right now. You’re capitalizing on good gains. Well, technology gets its legs under it again before we go, hopefully higher.

Caroline WoodsSo we should level set our expectations and expect 1 to 5% gains this year.

Jay WoodsWell, that’s what I said at the beginning. You know, when we did our.

Caroline WoodsEnd of last year.

Jay WoodsYou said you.

Caroline WoodsWere boring as best. You were boring.

Jay WoodsAt.

Caroline WoodsThis rotation. We’re seeing.

Jay WoodsWell, the playbook is still in play five, six weeks into the year. Let’s see how it continues to go. But right now we’re seeing good growth on the earnings front. Look at look at stocks like meta. Great earnings didn’t didn’t really go much higher than you know up 10% feeding it back. We’re seeing Google great earnings didn’t make new highs Microsoft wasn’t too bad.

Jay WoodsThey focused on the spend Amazon the same. So those big names that have lettuce have been growing. But people are focused on other things. And they think AI is going to capitalize capitalized AI. And a lot of those software names, they’re in the penalty box right now, and you’re going to see winners and losers. And I think we’re sifting through that right now to find out where those winners may be.

Jay WoodsBut in the meantime we’re going to materials very boring. We’re going to some rich Simon property group. Great name. Good dividend making new highs. But it’s not going to make headlines here or make waves when you’re looking at the overall market okay.

Caroline WoodsSo let’s talk about the week ahead. We have quite a few names on tap for earnings made seven obviously mostly out of the way. We still have Nvidia to come back to. But this week we have names like Cisco Legacy Tech. We have staples like Coca-Cola. We have Robinhood Software, stocks like Datadog. How could earnings impact the narrative this week.

Caroline WoodsWhat’s going to move markets most.

Jay WoodsYeah I think you have to break it down. Sector to sector. You mentioned Cisco the old giant in the Dow. Still if it breaks above 85 it’s just on the precipice. We’re talking all time highs a full reversal back to when the dot.com peak when that was the darling stock. That was the magnificent stock before we had an acronym for those.

Jay WoodsSo Cisco has been that silent assassin. Just keeps going higher and slowly trying along. It could get momentum with a positive earnings as people realize, oh my god, yeah, I missed this one. It’s still not too late to get into it. So you have Cisco on the technology front. As far as software stocks, you have three in that iGTV that ITV is a software ETF that has been crushed down 30% over the last 6 to 8 weeks.

Jay WoodsGetting a little bit of a relief rally. Well, that relief could get a little stronger when you have unity software down over 50% from its recent peaks. Day two dogs and, app love, and two names that have been really beaten down. If they report and we get some guidance that says, okay, maybe the software selloff has been a little overdone, they could help lift the rest of the sector, the two that have been really hurting them, Oracle and Salesforce.

Jay WoodsSalesforce 52 week low, the only down stock that made a new low last week. And then you look at Oracle. It’s just been getting destroyed getting a relief rally as we tape this. I still need to see a little more out of Oracle. Get us back to that 50 day moving average. 200 day moving average would be really nice.

Jay WoodsBefore I believe that the all clear is there, I still think they have some, issues going forward.

Caroline WoodsI’m curious, at what point does the tech weakness stop being rotation into other sectors and start becoming a bigger problem?

Jay WoodsYeah, well, if we can see like I think Microsoft is the bellwether when you look at that, Microsoft took it on the chin. They feel gaps going back to last April not at a 52 week low. 395 a very key level on watching there. But it’s held and it’s starting to rally. What you need to see is some consolidation.

Jay WoodsThe one stock that has a reported Nvidia. That stock has gone sideways now for the better part of six months. It’s going around this 175 to 190 level. And it’s been holding can earnings break it out. And we take another leg higher. We saw Palantir similar had great earnings. And guess what. Like meta. It kept up after earnings and then faded.

Jay WoodsAnd both of those stocks broke the 200 day moving average. So I use the 200 day moving average as a barometer of health. And right now that sector is not healthy. So what we need to do is he stabilization from a price action standpoint. Another good quarter with a good guide where we can say, all right, this AI narrative that it’s 80 itself and cannibalizing is is a little overdone.

Jay WoodsAnd then we get back to maybe a quick bounce and then slow and steady growth. And that will take time.

Caroline WoodsOkay. We also have CPI and a delayed jobs report this week a little bit later this week. How could that impact the rotation trade. And does this market want good news or does this market one bad.

Jay WoodsThat’s a great question. I don’t know what we want. What we want. We always want good news. But does it mean the market’s going to react that way. Let’s let’s break it down. We talk jobs. That was supposed to be released last week. Because of the slight delay passing the budget, it was delayed until Wednesday. Jobs, unemployment, 4.4%.

Jay WoodsLet’s see if that holds steady. When we talk about jobs, we also then talk about the other part of the dual mandate inflation. No better indication of inflation than that CPI. That’s the one number that causes more volatility than any other down here. They’re looking for it to decrease from 2.7 to 2.5%. I found that a little surprising.

Jay WoodsBut we’ve avoided and navigated the tariffs. Inflation looks like it could be coming down if we get that 2.5 estimated. Number. I think that would bode well for the market. But then it throws us into the conundrum. Well, why would the fed have to cut rates again? Everything is going well. And then we talk about the new fed leader and how that goes.

Jay WoodsSo there’s a lot of drama from the economic front. And it will start to kick off once we get that jobs and CPI. Because we don’t care what Powell has to say, we want to care. Well we’ll worst get you know, put into office. And how can he justify cutting rates if things are running at a very cool level on both sides of the dual mandate?

Caroline WoodsSo if you had to calm nervous investors with just a sentence or two right now, what would you say?

Jay WoodsLet’s focus on earnings and those stocks that have not participated over the last few years. Yeah, rotational trade is real. So you look for something a little safer. Stocks in the health care sector. Merck, Amgen, Pfizer. Yes, Pfizer I, I I’ve hated this stock for years, but they’re safer. They pay a nice dividend. And we’re starting to see people rotate into those names.

Jay WoodsYou said boring is back. I agree, some of the reach of the beaten down Simon property doing all right, coming back. And then if you want to get a little more aggressive, some of the biotech names Biogen had a great quarter last quarter. When you buy these biotech stocks, you have to worry about that next drug.

Jay WoodsAnd they have something brewing on the Alzheimer’s front. They get approval for that. Then the stock could take off another 25, 30% quickly. But if we’re still in that trial phase, it’s still growing in the right direction. So I like Biogen as far as biotech go.

Caroline WoodsAnd also want to quickly ask you about Bitcoin because in your note, a few weeks ago, you said if Bitcoin breaks below 76 77,000, the next like lower 60,000, which it did hit, you were spot on there. Yeah. Is Bitcoin out of the danger zone. Now that it’s rebounded a bit.

Jay WoodsIt’s no no Bitcoin. You have to watch that one carefully especially over the weekends because there’s less liquidity over the weekends it gets a lot more volatile 65,000 to 58,000, 50,000 to 200 week moving average. That has been a cool barometer for that to follow. It almost got there. Got to 60,000. So in the 60 to 65 range I would nibble.

Jay WoodsIf you think you know this is going to come back, then yes, you can get a nice sharp rally to 75,000 and still be in the downtrend. I don’t think we’re out of the woods when it comes to that. I only look at bitcoin. Technically, I’m not smart enough or foolish enough to really do a deep dive into it.

Jay WoodsI focus on the equities related to it. Robin Hood, which reports later this week, that got beaten down pretty hard. Yet. Meanwhile the trading activity should be through the roof. So I think Robin Hood will give us an opportunity if we do get another leg lower in Bitcoin and Robin Hood gets, into the high 60s, mid 60s, I think it would be great opportunity for someone that’s missed that trade to get in for the long term.

THIS OR THAT: starts at 10:50

Caroline WoodsOkay. We’ll keep that one on our radar for earnings as well. Before I let you go, you know what it’s time for. You’ve done this before. Yes. Rapid fire game of this or that.

Jay WoodsNo hedging no and no prep. So I have no idea what you’re about to throw out.

Caroline WoodsNo, you never do. All right, let’s let’s go here. Dow 50 K momentum peak or just the beginning I.

Jay WoodsThink just the beginning.

Caroline WoodsThe great rotation healthy off or a trap for bulls.

Jay WoodsIt’s, healthy hand off. But it’s not going to help with this with the tech sector just now.

Caroline WoodsFrom here equal weight S&P or market cap weighted.

Jay WoodsEqual weight for the next 3 to 6.

Caroline WoodsMonths. Small caps or mega caps.

Jay WoodsSmall caps right now.

Caroline WoodsU.S. or international?

Jay WoodsInternational.

Caroline WoodsBigger market move it mover this week jobs report or CPI.

Jay WoodsCPI.

Caroline WoodsFebruary outlook bullish or bearish.

Jay WoodsNeutral that’s this bearish I guess.

Caroline WoodsStrategy right now protecting gains or chasing returns.

Jay WoodsProtecting gains.

Caroline WoodsShifting to tech I reset or bubble.

Jay WoodsReset.

Caroline WoodsSoftware oversold opportunity or trap.

Jay WoodsOversold opportunity. But I don’t think we’re going to get the v that people are expecting.

Caroline WoodsI infrastructure hardware or software.

Jay WoodsRight now hardware.

Caroline WoodsSo software stocks buy the dip or stay on the sidelines.

Jay WoodsI buy the dip but I traded it’s a tradable bounce.

Caroline WoodsWhich trade has more upside right now. Tech or bitcoin tech. 

Moving on to fed and macro. Rates higher for longer or cut sooner than expected.

Jay WoodsI think we’re going to get a cut sooner than expected given the transition.

Caroline WoodsGood news is bad news or bad news is bad news.

Jay WoodsBad news is bad news.

Caroline WoodsTrading market or investing?

Jay WoodsMarket investing. Markets rotation.

Caroline WoodsVolatility creating opportunities or mistakes?

Jay WoodsBoth. But some opportunities in software right now.

Caroline WoodsFear creating value or destroying it.

Jay WoodsCreating value.

Caroline WoodsWhat’s the one thing the market is underpricing this week?

Jay WoodsWhat are we underpricing we’re underpricing these staples. I still think they can go higher.

Caroline WoodsOkay. It’s a safer play for 2026. Staples or tech safer staples. 

Better value right now Cisco or coca cola.

Jay WoodsCoca cola safe. Cisco though looks great. Breaking out and relatively to the tech peers. I like Cisco.

Caroline WoodsMomentum trade, Robinhood or Oracle which is popping today.

Jay WoodsWow. Both of them are broken stocks I would go Robinhood over Oracle.

Caroline WoodsInvesting style buy buy and hold S&P or selective stock picking.

Jay WoodsI’m always a buy and hold S&P.

Caroline WoodsGuy. Most misunderstood sector right now.

Jay WoodsOh software we don’t know what are the winners or losers. We’re still still trying to find that.

Caroline WoodsMost dangerous narrative on Wall Street.

Jay WoodsBuy the dip. It always works that one day will not happen.

Caroline WoodsOne chart every investor should be watching this week.

Jay WoodsS&P equal-weight breaking out to all time new highs. That just spells to the rotation. Slow, steady. Boring is back.

Caroline WoodsJay woods always a pleasure. Thanks so much.

Jay WoodsThank you.