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- Alpha Report Issue #118
Alpha Report Issue #118
The Current State of The Market
Brandon
February 09, 2026
Current read is 43 on the fear greed index vs 58 last week.
I put this closer to 60. The market at basically at ATHs with elevated valuations.
Market Fearful = Potential Opportunity/Deals. (consider buy calls/sell puts/buy shares)
Market Greedy = Potential Over Valuation. (consider buy puts/sell shares/take on less risk)
I like to be bullish when there is extreme fear
I like to be bearish when extreme greed.
Opportunity is out there, just gotta find it!
I put this closer to 60. The market at basically at ATHs with elevated valuations.
Historical Fear/Greed Index Level.
SP500 decently above 125DMA which does indicate greed not fear (but slowing becoming less greedy)
This Put/Call ratio shows people are bullish because this number is below 1. Below 1 = more people buying calls. Above 1 = more people buying puts. Notice how there was lots of puts being bought when the market was falling in April? Ya, most of those all expired worthless. Thats when I was selling them! So again, the fear greed index is skewed and this is not extreme fear as shown in the top right. (It’s greedy IMO)
Volatility is critical to understand cause it directly impacts options premiums & we capitalize on this!
30 year fixed mortgage rate increased to 6.09% Today, vs 6.08% last week.
10 year treasury bond yield fell at 4.22% Today, vs 4.23% last week
2 year treasury bond yield fell to 3.48% Today, vs 3.51% last week.
Not much action this week with bonds!
As I always say, interest rates are gravity!
As interest rates/bond yields DECREASE, stocks become MORE attractive because bond yields go DOWN which makes the risk free bond look LESS attractive.
Let’s Break It Down:
Upcoming Week Market Outlook | Week of Monday, February 9th
Last week we saw a pickup in volatility, especially in high beta, high volatility, high valuation stocks. That should not surprise anyone. When valuations are stretched and the S&P and NASDAQ pull back even slightly, sentiment flips fast. Investors go from euphoric to nervous, and those higher risk names tend to sell off hard.
Some of those stocks sold off more than what I think was justified, and there were real opportunities. I took advantage of that weakness. Even so, it is important to zoom out. The S&P and NASDAQ are only about 5% off all time highs. That is a dip, not a correction. In the big picture, it means almost nothing.
If a 5% dip makes you uncomfortable, that is not a market problem. That is a portfolio construction problem. Your portfolio should always be built in a way that can survive a 50% market drawdown, because one will eventually happen.
Right now, valuations are roughly 10% above intrinsic value. There is nothing stopping the market from overshooting to the downside and trading 25% below intrinsic value at some point. From current levels, that would imply a potential 35% peak to trough drawdown. That is not a prediction, just a reminder of what is always possible.
The labor market continues to weaken, but Q4 earnings have been coming in fairly solid. For now, the show goes on.
The strategy does not change. Buy great companies at good prices. Hold them long term. Only use stock options to magnify high conviction ideas, and give yourself at least one year of duration on options expirations. That approach continues to work over time.
Monday, February 9
A relatively quiet day overall. We have earnings pre market from several semiconductor related names, and additional semiconductor earnings post market. We also hear from multiple Federal Reserve governors.
Those Fed comments will matter. There are rumors that China may be directing banks to sell US Treasuries, which could push interest rates higher. If that topic comes up, markets will pay attention.
Tuesday, February 10
Earnings pre market from Coca-Cola and Oscar Health.
We also get the Import Price Index, which gives an early read on inflation trends. Retail sales are released as well, and this is important. Consumer sentiment surveys have been weak, but retail sales are hard data. This tells us whether consumers are actually spending money or just saying they feel bad.
Robinhood reports earnings post market. With all the recent volatility, it will be interesting to see how trading activity looked (guidance) and how much of the stock movement is tied to crypto versus broader high beta speculation. I am expecting decent numbers.
Ford also reports after the close. The focus there will be profitability and updates on their autonomous and EV initiatives.
Wednesday, February 11
Shopify reports earnings pre market.
We also get the delayed jobs report that was pushed back due to the brief government shutdown. I expect weaker numbers. AI is replacing certain roles, and the labor market continues to normalize after the post Covid surge. In my view, interest rates eventually need to come down to relieve pressure on employment.
Earnings post market from Apple, McDonald's, and Cisco. This gives us insight into consumer spending, enterprise demand, and global tech trends all in one evening.
Thursday, February 12
Initial and continuing jobless claims are released. This helps confirm whether the labor market is stabilizing or continuing to weaken.
Nebius reports earnings pre market, which should give us a read on AI infrastructure demand.
Arista Networks reports post market. Valuations in cybersecurity are still elevated, so guidance will matter more than just headline numbers.
Applied Materials and Rivian also report after the close.
Friday, February 13
The Consumer Price Index inflation report is released.
I expect fairly good numbers. That said, I continue to believe government CPI data understates true inflation trends. Alternative measures suggest inflation is already well below 1%. If that is the case, interest rates are too high relative to current economic conditions.
The labor market is not collapsing. The economy is not falling apart. But policy is tight, and eventually rates will need to come down.
Final Thoughts
We are deep into Q4 earnings season, and I will be breaking everything down in real time inside Discord, continuing to look for opportunities while keeping risk and ratios in check.
Given current valuation levels, I expect volatility to remain elevated, but investors with a longer term time horizon should still do very well.
This is exactly why I focus on long dated option contracts, buying calls and selling portfolio secured puts, not cash secured puts. Time and flexibility matter most in environments like this. Keep ratios & emotions in check!
I will see you all next week.
As always, I am rooting for you and want nothing but wealth & health for you & your family!
-Brandon
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