The AI sugar rush is getting audited.
Amazon’s big spend plan is forcing the market to ask the question nobody wants to answer:
Are we investing… or just lighting cash on fire to win a compute arms race?

This week alone, big tech market caps got shaved hard, and the software/services complex has bled roughly $1T since late January, depending on the basket you track. 

That’s not “a dip.” That’s a re-rating.

Also: the government shutdown noise is still messing with data timing (classic).

| Alfred Rappaport

Strengths:
A bounce attempt on a Friday after a brutal tech slide is not random — it’s positioning, short-covering, and “I don’t want to hold max fear into the weekend.” With VIX holding ~20, traders are still paying for protection, which often creates fuel for sharp snapbacks when sellers pause. The dollar steady and yields not spiking further gives the tape room to breathe.

Weaknesses:
Software and AI-adjacent names are getting repriced on two fronts: higher cost of capital and fear of product disruption. When a whole sector starts trading like it’s guilty until proven innocent, rallies can be fast but fragile. CapEx guidance is the new landmine — “great future” is nice, but the market wants to see the bill split.

Opportunities:
Sector bear markets create the cleanest rotations because losers become obvious and leadership becomes precious. The edge is not guessing bottoms — it’s stalking mean-reversion bounces after capitulation signals (volume spikes, breadth washouts, volatility stabilization). Also watch for “AI winners inside the wreckage” — firms positioned to absorb AI, not be replaced by it.

Threats:
If the shutdown keeps distorting data flow, traders can overreact to vibes instead of facts. Add in Super Bowl weekend liquidity quirks and you get thin conditions where algos can slap price around for sport. The bigger threat: the market starts believing the story that software demand gets structurally clipped — that’s not a dip-buying story, that’s a multiple reset.

AKA: when America turns into a dopamine day-trader for 4 hours.)

Super Bowl week isn’t about who wins the game.

It’s about who wins the attention + transaction war.

Your edge:
Trade the tide of hype… then respect the mean reversion when the confetti hits the floor.

The Watchlist (Sportsbook Exposure)

Primary (cleanest read):

• DKNG (DraftKings)

• FLUT (Flutter / FanDuel parent)
  
  

Secondary (messier, but tradable on narrative):

• MGM (BetMGM exposure)

• PENN (sportsbook + media drama factor)
  
  

The Pattern (What usually happens)

1) Buy the Buzz (pre-game run-up)
Money front-runs the headlines.
Stocks often climb before the event… because traders love the party invite.

2) Sell the News (post-game reality check)
After the game, the market asks:
“Cool story… where’s the margin?”
If the stock ripped into the event, you often see profit-taking + fade risk.

3) Volatility peaks into the event, then cools after
Options traders: this is where people overpay for excitement.
IV tends to inflate into the week… and can get crushed after.

Window A: 7–15 trading days BEFORE
Goal: Ride momentum if price confirms.

• Look for relative strength vs indexes

• Breakouts from clean bases

• Don’t chase gaps like a tourist chasing a taxi
  
  

Window B: GAME WEEK
Goal: Protect the edge.

• Expect chop and headline spikes

• Size down or tighten risk

• Let price come to your zone
  
  

Window C: 1–3 sessions AFTER
Goal: Trade the snapback or the fade.

• If it ran hard into the event → watch for mean reversion pullback

• If it sold off into the event → watch for relief bounce when “nothing catastrophic” happens
  
  

The TFT Trigger (Use the T.U.R.N. checklist)

• T – Tune In: Is the market risk-on or risk-off? (Don’t fight the tide.)

• U – Understand Rotation: Is money rotating into growth/consumer names or hiding in defense?

• R – Retracement Setup: Let price pull back into a defined zone—don’t pay retail.

• N – Nail the Power Zone: Enter on confirmation, not vibes.
  
  

 Gut-Check (before you click)

• Are you trading a catalyst… or renting excitement?

• If this rips pre-game, do you have the discipline to take profit like a pro?
  
  If you keep treating event trades like entertainment… how expensive does that habit get by December?

When a sector drops -20%, it’s not “on sale.” It’s on trial.

Here’s the brutal math your ego hates:

• -50% requires +100% just to get back to even.
  That’s not motivation. That’s a warning label.

Mental Model: “The Down-Escalator Rule.”
In a sector bear market, prices don’t fall like stairs.
They fall like an escalator going down while you’re trying to run up in dress shoes.

So the game changes:

• Don’t “buy and hope.”

• Trade the turn.

• Or step into a No Trade Zone™ until the tape proves stability.

Surprising stat to tattoo on your trigger finger:
This AI/Software drawdown has been severe enough that Reuters compared it to major shock periods like 2008, 2020, and 2022 in terms of intensity for the software/services complex. 

Translation: this is not a normal pullback. Treat it like live fire.

TFT Tactical Insight (what to do with this)

• Stop marrying sectors in bear mode. Date them.

• Hunt bounce setups only when: volatility stabilizes, selling pressure cools, and price reclaims key levels with confirmation.

• If you must participate: use defined-risk options structures and size like a professional, not a TikTok hero.

• Rotate into relative strength. Let weak sectors earn back your attention.

On Feb 6, 1986, the Dow closed at a record ~1,600.69, part of a powerful mid-80s bull run that rewarded trend-followers and punished stubborn bears.

Why it matters today (post-Mag 7 earnings, pre-Super Bowl):
The market loves narratives… but it pays price.
When leadership is clear, trends can run longer than people expect.
When leadership cracks (like software this week), the tape forces humility fast.

TFT takeaway:
Don’t chase noise — track leadership.
When leadership breaks, you don’t “believe harder.”
You rotate smarter.

TFT Epigram:
“When the crown slips off the leader, don’t bow to it — trade around it.”

$1 trillion.
That’s the approximate market-cap value Reuters says the S&P 500 software/services sector has lost since late January as investors price in both AI disruption and the cost of the CapEx arms race.

Why it happened:
Because markets don’t just price earnings — they price certainty.
This week, certainty got punched in the mouth:

• AI tools are moving from “cute” to “competitive.”

• Spending plans got massive.

• And investors realized the margin story might not be linear.
  
  

TFT lesson:
When a sector goes from “leader” to “liability,” you don’t average down blindly.
You defend the flywheel, stalk the turn, and let the market prove the new regime.

Clarity before commitment.

This is a trading verse disguised as wisdom.

Because the market punishes two things relentlessly:

• Impulsiveness

• Ego
  
  

Payday Friday energy makes people sloppy.

They want the dopamine of a “big bounce” more than the discipline of a qualified entry.

So ask yourself:

• Am I reacting… or executing?

• Am I chasing a feeling… or following a framework?

• If I keep winging it, what does my account look like by summer — and what does that cost my family’s options?
  
  

Biblical truth that hits traders:
Stewardship isn’t passive. 

It’s intentional.

And intention starts with choosing the right path before you take the step.

Get tactical. Get selective. Get paid without gambling.

Join the TFT Tactics Newsletter and get the extra edge:

• monthly tactical targets

• rotation reads

• execution lessons

• mindset conditioning
  …so you’re not guessing — you’re operating.
  
  

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The Fed is doing whatever the Fed does.

AI is on its 7th hype cycle.

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