🚀 Small Cap Revolution Accelerates: Russell 2000 Hits 11-Day Win Streak as Markets Enter MLK Holiday

⚡ KEY THINGS TO KNOW ABOUT THE WEEK AHEAD

🔴 CRITICAL MARKET ALERT: U.S. markets are CLOSED Monday, January 19, 2026 for Martin Luther King Jr. Day. Trading resumes Tuesday, January 20, 2026.

✅ WHAT HAPPENED FRIDAY:

• Russell 2000 (IWM) - 11th consecutive day of outperformance

• S&P 500 (SPY) - Consolidating near all-time highs

• Nasdaq (QQQ) - Tech rotation continues

• Small Cap Explosion - Biggest divergence since 1990

🎯 TOP WEEKEND CATALYSTS:

1. Trump Greenland Tariff Threat - President threatens tariffs on countries opposing Greenland acquisition

2. Kevin Hassett Stays at NEC - Fed Chair odds shift dramatically to Kevin Warsh (65%)

3. Defense Spending Surge - ONDS closes $1B capital raise; sector momentum exploding

4. OpenAI ChatGPT Go Launch - $8/month tier with ads coming to challenge Google

5. Iran Execution Halt - Trump praises Iran for canceling 800+ hangings

📈 WEEKEND MARKET SCORECARD

Major Indices - Friday Close (Jan 17, 2026)

Sector Performance - Week of Jan 13-17

🎯 HOTTEST SECTORS RIGHT NOW

🥇 #1: DEFENSE & AUTONOMOUS SYSTEMS ⭐⭐⭐⭐⭐

Catalyst: $1.5T Trump military budget + ONDS $1B capital raise

TOP PLAYS:

• ONDS (Ondas Holdings)

  • 📰 BREAKING: Closed $1B direct offering at $16.45

  • 🎯 2026 Revenue Guidance: $170-180M (+25% upgrade)

  • 💰 Pro-forma cash: $1.5B+

  • 📊 Backlog: $65.3M (+180% from Nov)

  • Target: $18.00-$22.00 (+44% to +76%)

  • Trade Rating: ⭐⭐⭐⭐⭐

🥈 #2: SPACE & SATELLITE ⭐⭐⭐⭐⭐

Catalyst: SpaceX IPO interviews + AST SpaceMobile commercial momentum

TOP PLAYS:

• ASTS (AST SpaceMobile) 🚀 If invested $10K 3 years ago = $200K today

  • 📡 BlueBird 6 successfully deployed

  • 🎯 Next satellite launch scheduled 2026

  • Target: $135-$150 (+26% to +41%)

  • Trade Rating: ⭐⭐⭐⭐

🥉 #3: SMALL CAP VALUE ⭐⭐⭐⭐⭐

Catalyst: Historic 11-day outperformance streak + money rotation

TOP PLAYS:

• IWM (Russell 2000 ETF)

  • 📈 Longest outperformance streak since 1990

  • 🎯 Technical breakout above $260 resistance

  • 💪 YTD: +8.3% vs S&P +1.7%

  • Target: $280-$290 (+5% to +9%)

  • Trade Rating: ⭐⭐⭐⭐⭐

🔥 HIGH-CONVICTION CATALYST TRADES FOR TUESDAY

DEFENSE & AUTONOMOUS SYSTEMS PLAYS

1️⃣ ONDS - Ondas Holdings ⭐⭐⭐⭐⭐

• Catalyst: $1B capital raise completion + 2026 guidance upgrade

• Price Targets:

  • T1: $16.50 (+32%) - Capital raise price

  • T2: $18.00 (+44%) - Analyst upgrade levels

  • T3: $22.00 (+76%) - Backlog multiple expansion

• Position Size: 3-5% portfolio

• Technical: Breaking out of consolidation, massive volume surge

• Fundamental: Revenue guidance $170-180M (up 25%), $1.5B cash, $65.3M backlog

2️⃣ IREN - Iris Energy ⭐⭐⭐⭐

• Catalyst: Bitcoin strength + datacenter demand

• Note: Mentioned as lagging $NBIS but poised for catch-up

3️⃣ NBIS - Nebius Group ⭐⭐⭐⭐

• Catalyst: ClickHouse valuation doubled to $15B (Nebius owns 20% stake)

• Trade Rating: ⭐⭐⭐⭐

SPACE & SATELLITE PLAYS

4️⃣ ASTS - AST SpaceMobile ⭐⭐⭐⭐⭐

• Catalyst: BlueBird 6 deployment + next launch imminent + SpaceX IPO buzz

• Position Size: 2-4% portfolio

• Note: 3-year return of +1,900% - momentum remains strong

5️⃣ RKLB - Rocket Lab ⭐⭐⭐⭐

• Catalyst: SpaceX IPO interviews creating sector momentum

• Note: Mentioned in Discord as space economy beneficiary

SMALL CAP ROTATION PLAYS

6️⃣ IWM - Russell 2000 ETF ⭐⭐⭐⭐⭐

• Catalyst: 11-day outperformance streak + technical breakout

• Position Size: Core holding 10-15%

• Technical: New all-time highs, strongest relative strength since 1990

7️⃣ IWC - Micro Cap ETF ⭐⭐⭐⭐⭐

• Catalyst: Up 11/11 sessions YTD, +8% from Jan 2 low

• Trade Type: Aggressive small cap exposure

• Note: More volatile than IWM but higher beta to small cap rotation

NVIDIA & SEMIS

🔟 NVDA - Nvidia ⭐⭐⭐⭐

• Catalyst: Jefferies PT raised $250 → $275

• Revenue Growth: 65.22% TTM to $187.14B

• Note: Trading at attractive valuation per analyst (mid-teens P/E on CY27 estimates)

💰 OPTIONS FLOW HIGHLIGHTS (From Friday)

Bullish Unusual Activity:

• $SPY - $1.3B Call Wall @ $695 (Bulls in control)

• $GLD - May $515 calls accumulated $2.66-$2.92 (Gold dip buying)

• $NBIS - Short puts paying for entertainment (bullish positioning)

Bearish / Hedging:

• $VIX - $500K OTM Call purchase (Highly unusual, hedge positioning)

• $QQQ/$SPY - Put premium $45.8M vs Call premium -$44.7M (Net selling pressure)

Notable Flow:

• Market Tide Action: Put bias on $QQQ/$SPY for Jan 16

• Net Volume: -547K (Slight bearish tilt going into weekend)

🌎 TRUMP POLICY IMPACT & POLITICAL EDGE

🔴 MAJOR TRUMP DEVELOPMENTS - FRIDAY 1/16/26:

Greenland Acquisition Push:

• 💬 Trump Quote: "I may put a tariff on countries if they don't go along with Greenland because we need Greenland for national security"

• 🎯 Estimated Cost: $700 billion

• 📡 Denmark Response: Arctic Commander invited US to joint military exercises in Greenland

• ⚠️ Trade Impact: Potential tariffs on countries opposing acquisition

• Market Implication: ⭐⭐⭐⭐ Defense/strategic minerals stocks benefit

Fed Chair Speculation Shifts:

• 📉 Kevin Hassett: Odds fell 54% → 13% after Trump said he wants to keep him at NEC

• 📈 Kevin Warsh: Surged to 65% odds (former Fed Governor)

• 💬 Trump: "Hassett was good on TV, and I may want to keep the NEC Director where he is"

• Market Implication: ⭐⭐⭐ More hawkish Fed expectations, bullish for value/small caps

Iran De-escalation:

• ✅ Trump praises Iran for canceling 800+ scheduled hangings

• 💬 Trump: "Nobody convinced me. I convinced myself" (on holding off Iran strikes)

• 🤝 Second phone call with Netanyahu discussing Iran

• Market Implication: ⭐⭐⭐ Risk-on sentiment, oil pressure

Healthcare Reform:

• 💊 "Great Healthcare Plan" with "tremendous reductions"

• 💰 Federal money to be paid "directly to THE PEOPLE" not insurance companies

• 🎯 Prescription drug prices "going to come down by numbers you have never seen before"

• Market Implication: ⭐⭐ Pharma/insurance uncertainty, rural hospital focus

Minnesota Immigration Protests:

• ⚠️ Trump warns may intervene if protests over ICE operations continue

• 💬 "Troublemakers, Agitators, and Insurrectionists are highly paid professionals"

• 📜 Insurrection Act threat (though later said "no reason RIGHT NOW")

• Market Implication: ⭐ Minimal unless escalates

Venezuela Oil Deal:

• 🛢️ US Energy Dept exploring plan to exchange heavy Venezuelan oil for US medium/sour crude

• 🎯 Purpose: Fill Strategic Petroleum Reserve (SPR)

• 🇻🇪 Venezuela preparing to resume dollar sales in local market

• Market Implication: ⭐⭐⭐ Energy sector complexity, potential oil pressure

🎖️ DEFENSE SECRETARY HEADLINES:

• 📰 "US Secretary of War Hegseth jabs Anthropic over safety policies" - Semafor

• Market Implication: ⭐⭐ AI defense policy focus

📊 TRUMP MOMENTUM TRADES:

1. Defense/Military: ONDS, LHX, LDOS, NOC

2. Energy/Strategic Reserves: Oil service, refiners

3. Pharma Reform Risk: Hedge with shorts on traditional pharma

4. Tariff Plays: Domestic manufacturers, reshoring beneficiaries

📊 SEASONALITY & MARKET PATTERNS

January Barometer Signal - BULLISH ⭐⭐⭐⭐⭐

• Historical Stat: When January is up >2%, final 11 months are higher 85% of the time

• Average Gain: 12%+ for rest of year

• Current YTD: S&P +1.7%, Small Caps +8.3%

• Implication: Strong continuation probability

Post-OPEX Week:

• Friday Jan 17 was major monthly OPEX

• Typical pattern: Volatility compression during OPEX, expansion after

• Gamma positioning: $1.3B call wall @ SPY $695, $1B at $700

• Next Week Setup: Tuesday open could see volatility expansion

MLK Day Historical Patterns:

• Markets closed Monday creates 3-day weekend positioning

• Historical: Tuesday after MLK Day averages +0.3% (slightly bullish)

• This Year: Small cap momentum likely continues on Tuesday open

🏦 ECONOMIC CALENDAR & EARNINGS WEEK AHEAD

KEY ECONOMIC EVENTS:

Monday, January 19:

• 🇺🇸 MARKETS CLOSED - Martin Luther King Jr. Day

Tuesday, January 20:

• 📊 NAHB Housing Index (Jan) - 9:00 AM EST

  • Est: 40 | Previous: 37

  • Impact: ⭐⭐ Watch homebuilder stocks

• 🎤 Fed Collins Speech - 9:50 AM EST

• 🎤 Fed Bowman Speech - 11:00 AM EST

• ⚖️ Supreme Court Ruling - May issue at least one ruling (Trump tariff case?)

  • White House: "Highly confident" SCOTUS will rule in favor of Trump's tariffs

• 🛢️ Baker Hughes Oil Rig Count - Released Friday showed:

  • Oil Rigs: 410 (vs 409 prior)

  • Total Rigs: 543 (vs 544 prior)

Week Ahead:

• Multiple Fed speakers (watch for rate cut guidance)

• Financial sector earnings (banks, regional banks)

• Tech earnings season begins late January

CRITICAL MARKET MOVING EVENTS:

1. Supreme Court Tariff Decision - Could come Tuesday, massive market impact

2. Fed Speaker Commentary - Rate cut expectations for 2026

3. China Trade Talks - Trump: "It's a good thing for PM Carney to sign a deal" (Canada-China)

📉 EARNINGS AFTER HOURS FRIDAY & SYMPATHY PLAYS

Friday AH Winners:

• PNC Financial - Q4 Beat (Regional bank strength)

• Regions Financial (RF) - Q4 Miss (caution on regionals)

Sympathy Plays for Tuesday:

• Regional Banks - Watch $KRE if PNC strength continues

• Financials - JPM, BAC, C all reporting this week

🪙 BITCOIN & CRYPTO SENTIMENT BREAKDOWN

Market Overview:

• Bitcoin: Trading strong, supporting IREN and NBIS miners

• Crypto Market Cap: Stable near highs

• Sentiment: ⭐⭐⭐⭐ Bullish

Top Crypto Trades:

• Bitcoin-related miners: IREN (lagging, catch-up potential), RIOT

• AI/Crypto crossover: NBIS (ClickHouse revaluation catalyst)

Key Developments:

• Mining infrastructure buildout continues

• AI datacenter demand supporting crypto mining stocks

• Regulatory clarity improving under Trump administration

🔴 SOFTWARE SECTOR WARNING ⚠️

Claude CoWork Effect - BEARISH on Traditional SaaS ⭐⭐

The Problem:

• Anthropic released "Claude CoWork" - agentic AI that can handle complex workflows

• Threat to: CRM, MNDY, PATH, DDOG, ADBE, ZETA, DUOL

• Companies growing only 10% despite claiming "AI is a tailwind"

• IGV (Software ETF) down -10% over past few months

Analyst Quote from Discord: "Software continues to get hit...these companies are producing incredible amounts of cash flow but the fears of 2 things seem to be creating an issue: 1) AI making their core workflows irrelevant, 2) These companies claiming AI is a tailwind for them but still only growing at 10%"

Software Stocks to AVOID:

• CRM (Salesforce) - Slow growth despite AI claims

• ADBE (Adobe) - Workflow disruption risk

• NOW (ServiceNow) - Agentic AI competition

• MNDY (Monday.com) - Workflow automation threat

Exception - AI Infrastructure Winners:

• NVDA - Picks and shovels, not at risk

• ASML, AMAT, LRCX, KLAC - Semiconductor equipment

• CEG, VST, NEE, VRT - Power/datacenter infrastructure

💡 MASTERMIND INSIGHTS & COMMUNITY GUIDANCE

Key Takeaways from Trading Community:

Small Cap Rotation is REAL:

• 10 consecutive sessions of IWM outperformance

• Ryan Detrick: "When Jan is up more than 2%, the final 11 months are higher nearly 85% of the time and up more than 12% on avg"

• Kobeissi Letter: "Russell 2000 has outperformed S&P 500 for 10 consecutive sessions, the longest run since 1990"

Don't Fight the Tape:

• Market Sentiment: "Dips keep getting bought all week regardless"

• Options Positioning: Bulls still in control with $1.3B call wall @ $695

Sector Rotation In Progress:

• OUT: Mega-cap tech, software

• IN: Small caps, value, financials, defense, energy

Top Trader Callouts:

• Shay Boloor: ASTS remains top space play, "if you invested $10K 3 years ago, you'd be sitting on ~$200K"

• kulturdesken: "Energy is the most important part of the market. Everything is energy in the end" - Bullish $OKLO uranium

• Jason (@3PeaksTrading): "$NBIS for the win" - short puts strategy

• Anand: NBIS lagging IREN, "anticipating a ripper in the coming days towards $120-$125"

📰 NEWS CATALYST WRAP-UP

TOP MARKET MOVING HEADLINES:

Bullish Catalysts:

1. ✅ Small Caps Historic Run - 11-day streak, +8.3% YTD

2. ✅ ONDS $1B Capital Raise - Defense sector momentum

3. ✅ SpaceX IPO Interviews - Space sector FOMO

4. ✅ OpenAI ChatGPT Go Launch - AI monetization clarity ($8/month)

5. ✅ Trump Iran De-escalation - Risk-on sentiment

6. ✅ Jefferies Nvidia Upgrade - PT $250 → $275

7. ✅ Regional Bank Earnings - PNC beat signals strength

8. ✅ Fitch: Oil Oversupply - Caps geopolitical risk premium

Bearish Catalysts:

1. ⚠️ Software Sector Collapse - Claude CoWork threat, down -10%

2. ⚠️ Treasury Yields Rising - 10yr at 4.22%, 9-day streak

3. ⚠️ Tech Rotation Out - QQQ only +1.2% YTD vs IWM +8.3%

4. ⚠️ Homebuilder Weakness - US Jan Homebuilder Index: 37 vs Est 40

5. ⚠️ VIX Unusual Call Buying - $500K OTM calls (hedge positioning)

Neutral / Watching:

• 📊 Fed speakers (Collins, Bowman) - Rate cut expectations

• 📊 Supreme Court ruling possibility - Trump tariffs

• 📊 China-Canada trade deal progress

• 📊 OpenAI ads in ChatGPT - Impact on GOOGL

🎯 OVERALL MARKET STRATEGY FOR TUESDAY OPEN

Primary Thesis: Small Cap Rotation Continues

• Conviction Level: ⭐⭐⭐⭐⭐

• Trade: Long IWM, long small cap stocks benefiting from rotation

• Risk: Fed speakers turn hawkish, yields spike further

Secondary Thesis: Defense/Space Sector Momentum

• Conviction Level: ⭐⭐⭐⭐⭐

• Trade: ONDS, ASTS, space infrastructure

• Risk: Profit-taking after major runs

Contrarian Thesis: Software Sector Capitulation Buying

• Conviction Level: ⭐⭐⭐

• Trade: Selective buys in oversold software (wait for bottom)

• Risk: Claude/AI disruption fears are real, not overblown

Safe Haven: Core Holdings

• SPY/QQQ - Maintain exposure but underweight vs small caps

• NVDA - Structural AI winner regardless of software disruption

• Semis - ASML, AMAT, LRCX still benefiting from AI buildout

🔮 S&P FUTURES KEY LEVELS

ES_F (S&P 500 Futures):

• Critical Resistance: 6,993 (OPEX magnet)

• Next Resistance: 7,002 | 7,010

• Support Levels: 6,977 | 6,969 | 6,961

• Bias: Neutral to slightly bullish, consolidation pattern

NQ_F (Nasdaq Futures):

• Pattern: Low resistance liquidity conditions

• Bias: Rotation out continues, but dips getting bought

🚨 BULLISH & BEARISH SENTIMENT OVERVIEW

BULLISH FACTORS (60% Weight) 🟢

1. Small cap historic 11-day outperformance

2. January Barometer extremely bullish (85% win rate)

3. Defense sector momentum with $1B+ capital raises

4. Space sector FOMO on SpaceX IPO news

5. Trump de-escalation with Iran = risk-on

6. Dips getting bought consistently

7. Options positioning bullish ($1.3B call wall)

8. Earnings season starting strong (PNC beat)

9. Regional bank strength

10. Nuclear/energy sector AI datacenter demand

BEARISH FACTORS (40% Weight) 🔴

1. Software sector -10% on AI disruption fears

2. Treasury yields rising 9 straight days (4.22% on 10yr)

3. Mega-cap tech rotation out (QQQ lagging)

4. VIX unusual call buying ($500K OTM)

5. Homebuilder weakness (index 37 vs est 40)

6. Valuation concerns (SPY P/E 22.2 vs 5yr avg 20.0)

7. Fed rate cut expectations diminishing

8. Geopolitical uncertainty (Greenland, tariffs)

NET ASSESSMENT: ⭐⭐⭐⭐ MODERATELY BULLISH

• Favor small caps, value, cyclicals over mega-cap tech

• Use 3-day weekend to reassess positions

• Tuesday open likely volatile on pent-up overnight news

📋 MONEY ROTATION MAP

OUTFLOWS (Sell Pressure):

• 📉 Software (CRM, ADBE, NOW, MNDY)

• 📉 Mega-Cap Tech (GOOGL seeing competition from OpenAI)

• 📉 Healthcare (policy uncertainty)

• 📉 Consumer Discretionary (rate sensitivity)

INFLOWS (Buy Pressure):

• 📈 Small Caps (IWM, IWC)

• 📈 Financials / Regional Banks (rate beneficiaries)

• 📈 Defense / Aerospace (ONDS, LHX, LDOS)

• 📈 Space / Satellite (ASTS, RKLB)

• 📈 Energy / Nuclear (CEG, VST, uranium plays)

• 📈 Value sectors (Industrials, Materials)

ROTATION THESIS:

Markets rotating from Growth to Value, Large Cap to Small Cap, Tech to Cyclicals

🎬 FINAL TAKEAWAYS & ACTION ITEMS

For Tuesday, January 20, 2026:

✅ DO:

1. Add to small cap exposure (IWM, individual small caps)

2. Initiate ONDS on any weakness ($12-13 range)

3. Hold ASTS for momentum continuation

4. Accumulate defense/space on dips

5. Watch Supreme Court for tariff ruling

6. Monitor Fed speakers for rate guidance

7. Keep tight stops given 3-day news buildup

❌ DON'T:

1. Chase software stocks without clear bottom

2. Ignore the small cap rotation signal

3. Fight the defense sector momentum

4. Overlook energy/nuclear AI infrastructure theme

5. Panic on normal post-OPEX volatility

Risk Management:

• Position sizes: 2-5% per trade (3-10% for core holdings like IWM)

• Stop losses: -15% maximum on individual names, -5% on ETFs

• Take partial profits at first target (T1)

• Trail stops on momentum names (ONDS, ASTS)

Week Ahead Focus:

• Small cap continuation vs. reversion

• Defense sector earnings/announcements

• Fed speaker rhetoric

• Supreme Court tariff decision

• Earnings season kickoff (financials)

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January 19, 2026 | Market Open Edition

Disclaimer: This newsletter is for educational and informational purposes only. Not investment advice. Trading involves substantial risk of loss. Past performance does not guarantee future results. All prices verified as of January 16, 2026 market close unless otherwise noted.

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