THE CARA PLAYBOOK — Wed., Feb. 11, 2026
Post-Market Analysis | Strategic Guidance for Professional Allocators
Bill Cara | Feb 11, 2026 | 5:18 pm ET
Playbook Wednesday
Wednesday’s session delivered the Great Rotation in full force. Energy and Materials surged alongside a commodity supercycle signal (gold miners +3%, industrial metals breakout), while Financials collapsed and Tech flatlined in neutral repair. The S&P shed 0.22% to 6,927, but internals told the real story: cyclical exceptionalism met growth capitulation. Dow Transports bifurcated violently (rails strong, airlines broken), confirming the “Old Economy” versus “New Economy” schism is no longer subtle—it’s structural. Credit remains healthy, VIX crushed, and global ex-US equities (Korea +8.6% 1W, Japan extending) are outperforming the S&P. The tape is screaming: rotate or get rotated.
I. SESSION SUMMARY & REGIME ASSESSMENT
What Happened Today
Asia Close: Japan extended its post-election rally with financials and trading houses (Mitsubishi Corp, Orix) posting explosive gains. South Korea ripped higher on financials and autos. China/Hong Kong remained in repair mode—prices stabilizing but internals weak, lacking institutional sponsorship seen elsewhere.
Europe Mid-Session: Stark bifurcation emerged. Spain, UK, Netherlands led on cyclical/defensive rotation (Repsol, SSE, Ahold Delhaize all INSTAT 100). France and Switzerland were deep laggards (INSTAT ~13), with luxury and tech names (Publicis -8.7%, Capgemini -8.2%, Schindler -10.3%) facing aggressive distribution.
US Session: The rotation accelerated. Energy (XLE) and Materials (XLB) registered INSTAT 100 with robust 1D gains (+2.6% and +1.8% respectively), extending powerful 1W trends. Financials (XLF) collapsed with INSTAT -62, while Consumer Discretionary exhibited capitulation. Tech remained trapped in neutral repair (XLK INSTAT 12). The S&P closed marginally lower, but the real story was internal violence: Caterpillar +12% 1W versus Amazon -12% 1W—a historic factor divergence.
Regime Call: Late-Cycle Cyclical Exceptionalism — The Great Rotation Confirmed
Wednesday wasn’t a correction—it was regime crystallization. The market is executing a violent, conviction-driven sector rotation out of rate-sensitive Financials and overvalued Consumer Discretionary into real economy cyclicals. GSCI commodities posted fresh monthly highs alongside sector leaders. Energy (XLE), Materials (XLB), and Industrials (XLI) are exhibiting maximum bullish sentiment (INSTAT 100), while Financials and Discretionary show distribution without stabilization signs.
Critically, this rotation is being validated across multiple cross-asset signals: credit spreads tightening (Energy HY, CMBS at INSTAT 100), VIX collapsing (deep laggard, down >5% 1W), USD weakening (fueling EM FX surge in THB, MYR, MXN), and industrial metals breakout (Nickel +4% 1W, Copper confirming). The “plumbing” remains healthy—this is not systemic stress but capital reallocation.
Global ex-US equity leadership is unmistakable: South Korea (EWY) +8.57% 1W, Japan strong, Mexico/Brazil surging on commodity tailwinds. Conversely, US large-cap core (SPY INSTAT 32) is languishing. The Nasdaq failed to participate, caught between semiconductor resilience and platform/software capitulation.
The regime is clear: Cyclical Exceptionalism. Longs should focus on commodity-aligned North American/Latin American/Asian names showing persistent accumulation; shorts or reduces should target Financials and Discretionary names exhibiting distribution (INTU, CMG, HIMS, XLF constituents) without stabilization evidence.
