by Jason Bodner
February 10, 2026
For most of its existence, the universe was dark. After the Big Bang, matter existed without stars or clear structure. Gravity slowly pulled particles together until conditions finally allowed light to form. Nothing dramatic marked the transition. It happened quietly, driven by accumulation rather than by big changes.
Markets tend to work the same way.
The most important shifts rarely announce themselves. They develop beneath the surface, visible first in positioning and capital movement, not reflected in price or narrative. Last week offered a clear example.
Let’s start at the top. The Big Money Index (BMI) dropped from 72.9 on January 27th to 69.2 last Friday.
The slowness of the decline reflects a calm drift, yet I see some violent rotation underneath the surface.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Equity outflows have accelerated. We are seeing the most intense equity outflows since November, and the fourth strongest outflow period of the past 12-months. On its own, this suggests some caution.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
What makes this different is what is happening alongside those outflows. In the past six-trading sessions, there were 1,206 inflow signals versus 926-outflows. While selling pressure is elevated, capital is clearly being reallocated rather than fleeing risk. This is not a flight to cash; it is a clear rotation.
ETF data reinforces the point. This is the fourth instance this year of elevated ETF outflows, but unlike prior episodes, it is occurring with heavy inflows, as investors are repositioning, not de-risking wholesale.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Trading activity supports this interpretation. Elevated Trading Volumes (unusually large trades) are nearly three-times their 20-year average: Recent readings average 1,480 vs a long-term average of 526.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
At the sector level, leadership shifted. Defensive groups such as Consumer Staples and Utilities have risen in the rankings, while growth-oriented sectors like Consumer Discretionary and Technology have moved lower. Such rotation is consistent with capital redistributing within equities, not abandoning them.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Taken together, the top-level data paints a clear picture. Volatility has increased. Outflows have risen, but inflows remain active and engaged. Money is moving, not leaving the market.
We’re Seeing Rotation, Not Retreat
Markets look unsettled. Crypto-currency was roasted. Technology felt the burn. Some capital moved into dividend yield and large-caps. While this behavior may look defensive, the money flows suggest something else.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Capital rotated aggressively into small-caps and cyclical sectors. Energy, Industrials, Financials, and Materials all saw strong inflows. Small-cap and mid-cap indices significantly out-performed large-cap benchmarks. This does not align with broad risk aversion. It aligns with leadership change.
This is where flows add more clarity than prices alone. Different market participants operate on different timelines. Some are forced sellers, responding to margin calls. Others are allocators repositioning capital for what comes next. When those actions occur simultaneously, the market sends mixed signals.
If you watch price alone, you may struggle to explain it, but money flows make it visible.
Episodes like this are often amplified, and sometimes initiated, by systematic and high-frequency trading. Algorithms respond to price, volatility, and liquidity. When volatility rises, these systems react instantly, often accelerating moves which would otherwise unfold more gradually. In crowded areas like technology and crypto-currency, where amplification can be significant. This matters because it explains why moves can feel sudden and exaggerated without reflecting a true shift in long-term fundamentals.
Retail investors tend to act last. Historically, individual investors are not the first to sell technology stocks during corrections. They respond after price damage becomes obvious and narratives turn decisively negative. We’re not there yet. Most of the activity so far has been institutional and algorithmic.
To understand the source of the volatility, start with crypto-currency. Over the past several sessions, ETF outflows across Bitcoin and Ethereum products were broad and uniform. This was not selective selling. It was mechanical. When flows behave this way, leverage is usually the driver.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Crypto-currency remains one of the most leveraged parts of the market. Leverage works until volatility rises. When prices move sharply, brokers reduce risk. Margin requirements tighten. Positions are cut. Because crypto-currency margin is less standardized than equity margin, deleveraging can happen quickly and unevenly.
We see deleveraging as well in silver. After a meteoric rise, a sudden violent collapse:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
When leverage unwinds, investors sell what they can. Embedded gains become liquidity, which is how pressure originating in crypto-currency spills into other areas, even when fundamentals are unchanged.
Why Technology Felt the Impact
Technology absorbed much of the recent pressure. Technology is liquid and heavily owned. Imbedded profits are often the first source of capital during forced selling. Software stocks, in particular, were hit hard, not because earnings deteriorated, but because positioning was crowded and gains were available.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
At the same time, some capital rotated into dividend yield and large-caps. On its own, such behavior looks defensive. In context, it looks temporary. A holding pattern while leverage is reduced.
The broader backdrop reinforces this interpretation. Margin debt is at the highest level in history charted below. At the same time, cash balances are also at record highs. This combination produces sharp, fast moves. Leverage magnifies volatility. Cash limits how far dislocations tend to travel.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
We have seen this pattern before. A brief air-pocket forms as leverage is reduced. Volatility rises. Narratives follow price. Capital then reallocates and leadership shifts. This is rotation, not liquidation. The distinction matters because rotation redistributes capital. Liquidation removes it.
What Money Flows Are Saying Now
To summarize, the money flow data supports the rotation view. While outflows spiked, we also just had one of the largest inflow days in over a year. Hundreds of stocks saw institutional accumulation. When segmented by market capitalization, small-cap and mid-caps dominated. Sector data showed heavy buying in cyclicals while technology absorbed nearly half of total outflows.
ETF flows told the same story. Capital moved away from leveraged crypto-currency exposure and crowded technology products toward small-caps and cyclical assets. When multiple datasets align, it is worth paying attention.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Near term, small-caps and cyclicals are attracting capital. Energy, Industrials, Financials, and Materials are the rising sectors. Longer term, nothing about this rotation undermines the structural case for technology. Periods of forced selling often create opportunities rather than deterioration.
I am selectively adding high-quality software names with multi-year horizons, reflecting my views about forced positioning says more than headlines. I am also watching crypto-currency as a dislocated asset. When the leverage unwinds, prices tend to overshoot. Risk and reward rebalance before sentiment does.
The broader takeaway matters more than any individual allocation.
Markets are complex systems shaped by leverage, liquidity, and behavior. Expecting clean stories leads to late decisions. Watching capital move provides clarity when price alone does not.
As Seneca wrote, “Luck is what happens when preparation meets opportunity.”
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
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Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation and distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner
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