Stock Market & Crypto Analysis for Week Ending 2/8/26

Market Analysis - February 6th, 2026 - Brian Shannon (altrends.net)

Key Concepts:

• Anchors: Year-to-date, all-time high, and inception anchors used as key support/resistance levels.
• Moving Averages: 5-day, 20-day, and 50-day moving averages used to identify trends and potential entry/exit points.
• Anchored Volume Weighted Average Price (AVWAP): Used to identify significant price levels based on volume.
• Basis Points: A unit equal to 1/100th of one percent, used to describe changes in interest rates or yields.
• Options Trading: Speculative trading strategy involving call options, with high risk/reward potential.
• Relative Strength: Comparing the performance of different assets (e.g., Gold vs. Silver).
• Futures Market: A market where contracts are traded for the delivery of an asset at a future date, offering greater liquidity and risk management opportunities.

---

Equity Markets – S&P 500 & NASDAQ

The S&P 500 experienced a slight loss of 17 basis points, but the real story lies in the chart patterns. A pullback yesterday was sharply reversed today, bringing the index back above the 5-day moving average. The ideal entry point for a lower-risk trade would be a pullback towards the 5-day moving average, coinciding with the year-to-date and high rebuild anchors, to establish a higher low before continuing upward. Currently, the 20 and 50-day moving averages are rising, indicating an overall bullish trend.

The NASDAQ showed more resilience, holding at the low end of its range after testing the anchor off a previous low multiple times. Activity is concentrated in the upper zone of the range. Caution is advised if the 20 and 50-day moving averages and the support band act as resistance.

Component Analysis: Apple had a strong week following earnings, while Google experienced a significant hit and is struggling to recover. Meta continues to face difficulties after a failed earnings gap-up, and Microsoft’s performance has been consistently poor.

Microsoft – Potential Trend Reversal

On the weekly chart, Microsoft is testing a trend line connecting previous lows. A bounce is possible, but the 15-minute timeframe shows a declining 5-day moving average and a pattern of lower highs and lower lows, suggesting no immediate buying signal. Brian Shannon emphasizes, “I’d rather be late and correct than early and wrong,” highlighting the risks of prematurely entering a position in Microsoft or Netflix.

Software Sector & Mid-Cap Performance

The XSSW (S&P 500 Software Services ETF) has been performing poorly, despite 30 stocks reaching new all-time highs (primarily in the Dow). Mid-cap stocks (represented by the Russell 2000) are showing more positive behavior, bouncing off the 50-day moving average. A pullback followed by a demonstration of strength could present a buying opportunity, with a stop-loss order placed under the resulting higher low.

Semiconductor Sector – Breakout & Options Strategy

The semiconductor sector demonstrated the most significant move of the week, breaking through the 380 resistance level. This breakout coincided with the 50-day moving average and an anchored volume weighted average price (AVWAP) from a prior low. A trend line, similar to the one observed in Microsoft, was also present.

While not advocating for buying the dip, Brian Shannon utilized a speculative options strategy, purchasing 390/250 call options that increased in value from $1-$1.25 to $10.20. He cautions that options trading is high-risk and requires precise timing and a willingness to accept potential losses. He suggests waiting for a potential pullback to the 5-day moving average, year-to-date anchor, and anchor from the all-time high before considering a long position, with a stop-loss order placed under the higher low or today’s low. He stresses avoiding “FOMO” (fear of missing out) and chasing the rally.

Cryptocurrency – Bitcoin & Altcoins

Bitcoin bounced off the 64 level (anchor from the last halving), experiencing a 13-14% rally. Similar to the semiconductor strategy, the recommendation is to avoid chasing the rally and instead look for a pullback towards the anchor off the recent low as a potential buying opportunity, establishing a stop-loss around 66. Upside potential is identified around the 74 level, influenced by the anchor from the high of the year and the year-to-date anchor.

Other cryptocurrencies, like Ethereum and Solana, did not reach the anticipated support levels (anchors from Coinbase inception and Solana’s inception, respectively) and remain in a significant decline.

Precious Metals – Gold & Silver

Gold futures successfully bounced off the year-to-date anchor after encountering resistance at the conjunction of the all-time high anchor and the declining 5-day moving average. The 5-day moving average is now flattening and rising, suggesting the sell-off may be over.

Silver’s performance is less bullish, remaining below key anchors and the declining 5-day moving average. This indicates clear relative strength in gold compared to silver.

Futures vs. ETFs: Brian Shannon emphasizes the importance of understanding the futures market when trading gold, as it accounts for 93% of all trading volume, unlike the GLD ETF which only represents 7%. The futures market offers better liquidity and risk management due to its 23-hour trading schedule. He suggests the possibility of another push beyond new highs in gold, often seen after significant speculative moves.

---

Notable Quotes:

• “I’d rather be late and correct than early and wrong.” – Brian Shannon, emphasizing the importance of patience and confirmation before entering a trade.
• “Buy the right side of the V.” – Attributed to Lance Brightstein, advocating for waiting for confirmation of a reversal before entering a long position.

Conclusion:

The market analysis highlights a complex landscape with varying degrees of strength and weakness across different sectors. The emphasis is on identifying key support and resistance levels (anchors), utilizing moving averages to confirm trends, and exercising patience before entering trades. Speculative strategies, like options trading, are acknowledged but cautioned against for most investors. The overall message is to avoid chasing rallies, wait for pullbacks, and establish clear risk management strategies (stop-loss orders) to capitalize on potential opportunities. The analysis underscores the importance of understanding the nuances of different markets (futures vs. ETFs) and focusing on relative strength to identify promising investment opportunities.