Re-Acceleration Goes Mainstream
Hello All,
Jumping straight into it, it’s been a relatively quieter week with respect to economic data, although of the data reported, it has been much better than feared as the recent and ongoing pricing-in of an economic re-acceleration continues to take place (ISM Manufacturing Index at its highest level since January ’22).
With that being said, on one hand of the market we’ve seen outperformance across Value, Cyclicals, and Equal-Weight, while on the other hand we’ve seen violent factor unwinds as the selling across SaaS and Tech, generally speaking, continues. Given this rotation and the renewed demand for Value and Cyclicals, the Dow and Small-Caps have been the best-performing indices on the week, whereas the Nasdaq has been the worst and currently sits lower by just over 250bps.
For those who may have missed, we published our ‘2026 Outlook’ which has a plethora of coverage on a wide range of topics / themes as ‘26 kicks off after coming off a strong ‘25 & for those whom would like to go back & read the report, I included it just below:
And for anyone who wants to follow an actively managed portfolio in real time:
I’ve joined Plutus as the cleanest, day-to-day way to track an actively managed portfolio in real time. It’s a live dashboard that’s broader, more diversified, actively managed by me, & updated continuously.
The Eliant Flagship is published on RunPlutus.
Once your Plutus account is approved, you’ll have the option to allocate right away. If you do, it’s straightforward: create an account, link your brokerage (Available only for IBKR at this time), & select the Eliant Flagship (or any of the baskets I’ve built). Your money stays in your account, and trades, position changes, and rebalances are replicated automatically so there’s nothing manual to manage. The idea is to make it easier to access an actively managed portfolio run by me without the overhead of traditional fund structures or high minimums, whilst you keep full custody of your assets & I stay focused on research, positioning, and portfolio construction.
And just to be clear, NOTHING is changing with Substack. It’ll stay exactly what it’s always been since we originally launched in the Summer of ‘23: where I share the thinking, research, & select trades behind my personal PA, along with ongoing commentary across all markets.
Earlier in 2024, we launched a series titled Educational Pieces, covering a wide range of topics, many of which were suggested directly by you all (4-Part Series).
For those who may have missed the first installment, it covered topics including:
General background / knowledge on all option strategies
In-depth talk on risk / reversals & how to go about expressing / utilizing them
Options Structuring
When to used naked calls / puts vs. spreads
Choosing expiration dates
Identifying key pivots / supports / resistance zones
General briefing on stock gaps
What to look for in regards to fundamentals
Implementing fundamental / macro / technicals into a trade
Hedging
Creating risk/reward setups
Taking profits / managing losses
Overall Process
Book recommendations
A link to the original Educational Piece can be found here .
Given the positive feedback and how useful many of you found the first installment, we followed up with Educational Piece: Part Deux earlier in 2025 & for those who may have missed, a link to the piece can be found here & we then went on to release Educational Piece: Part Trois which can be found here.
And finally, the most recent installment, Educational Piece: Part Quatre, can be found here.
‘Risk management is the silent prerequisite for compounding & true wealth is built not by chasing the highest returns but by ensuring the survival necessary to realize them.’
Kicking right off into the recap, as we briefly touched on earlier but the general theme of the week has been an amplification along with the continuation of a rotation out of Growth to instead Value as the spread between the two groups has now grown to 10% Year-To-Date:
Today alone, Value posted it’s 3rd largest 1-day outperformance against Growth in history:
The recent amplification has boiled down to two factors:
1. The ISM Manufacturing Index jumped to 52.6 earlier this week, its highest level since January ’22, further emphasizing that the economy is undergoing a re-acceleration. As a result, this has driven outperformance across Cyclicals and Value, which were significantly under-owned heading into the year.
- And secondly, the apocalypse across SaaS and Tech, driven by the quick and swift pricing-in of terminal risk related to AI threats, has now led IGV to fall over 20% YTD, with the index making its way back to the 200-week moving average.
And in regard to the pricing in of an economic re-acceleration, of the 5 best performing sectors YTD, 5 of them are Cyclical:
- Energy (Cyclical)
- Materials (Cyclical)
- Staples (Defensive)
- Industrials (Cyclical)
- Real Estate (Cyclical)
As a result, this broadening of upside participation, today specifically, led to a new high within the ADV-DECL Line despite the S&P having closed red & remaining over 100bps off the highs:
And with that being said, this underlying dynamic mentioned above can be partially seen below as despite both Spooz & the Q’s having performed lackluster as of late, 50% of stocks still remain above the 20D which still is a more neutral signal rather than overbought & or oversold:
Similar can be said on a more broader timeframe as well as despite the Nasdaq for example having closed below the 100D & price-action within Spooz remaining lackluster as well, still 58% of stocks remain above the 50D which highlights a market slightly in neutral territory after having recently come out of overbought territory. Again, this is mostly attributed to the broadening upside participation amongst the indices despite Tech specific sectors / Overall AI-Trade / MAG-7 remaining lackluster YTD:
And the Fear-Greed index underscores the point just above as well as despite the % of stocks above the 20D & 50D remaining healthily in neutral territory, the Fear-Greed index has fallen back into ‘Fear’ territory after having briefly sat in Neutral-Greed territory for the last couple of weeks:
And lastly, before we jump into the remainder of the recap, despite the overall perception of market exuberance, Goldman’s U.S. equity sentiment indicator remains near neutral & only marginally above negative territory.
General point here being, this remains a market with positioning thats far from stretched territory which is typically associated with true market euphoria:
