The US job market is under pressure, as indicated by a fall in JOLTS Job Openings data from 6.9 million in November to 6.5 million in December. In addition, US corporations laid off 108,000 employees in January. The NASDAQ 100, dominated by tech stocks, hit a new low since November 24, and companies such as Alphabet, Estée Lauder Companies, Super Micro Computer, and Eli Lilly experienced decline in share prices due to various factors.
Bitcoin has dropped below $67,000, losing over $1 trillion in market value recently. Shares of MSTR are down 72% from their peak. Conversely, despite a general risk aversion, gold has not gained, falling 3% to near $4,800 per troy ounce. Meanwhile, US Treasuries have benefited, with a notable steepening in the yield curve.
Nasdaq 100 Weakness
The NASDAQ 100 continues to weaken, with nearly one-third of its holdings now considered oversold. Advanced Micro Devices and Palantir Technologies have seen significant losses over recent trading sessions. Within the software sector, AI poses a threat to traditional software providers, contributing to further declines in the market, with Microsoft impacting the space with its declining shares.
Given the market’s current state of fear on February 6, 2026, we see volatility as the most direct opportunity. The CBOE Volatility Index (VIX), often called the market’s “fear gauge,” is stirring, and we expect it to climb much higher in the coming weeks. Looking back at historical stress periods, such as the 2008 financial crisis, the VIX surged to levels above 80, which suggests there is significant room for upward movement from current levels.
Our primary focus is on the pronounced weakness in the NASDAQ 100, which has now broken below the key support levels established in December 2025. We are actively buying put options on the QQQ ETF to gain direct exposure to this continuing downward momentum. The technical analysis points toward the 23,854 level as the next major support zone, which is where we will be looking to take initial profits.
The narrative that AI is a near-term threat to high-margin software companies is clearly taking hold and punishing former market darlings. We are using put spreads on individual names like Microsoft (MSFT) and some of the oversold stocks like PayPal (PYPL) to manage risk while positioning for more downside. After years of trading at historically high price-to-sales ratios, many of these companies are exceptionally vulnerable to this kind of shift in market psychology.
Defensive Strategies
We are also executing a classic flight-to-safety rotation, mirroring the broader market’s move out of cyclicals and into defensive sectors. This involves purchasing call options on healthcare (XLV) and consumer staples (XLP) ETFs while simultaneously buying puts on consumer discretionary (XLY) and energy (XLE) ETFs. This relative value strategy should perform well as long as these recessionary fears continue to dominate headlines.
The bond market is screaming a warning as money floods into US Treasuries, and we are following that signal by buying calls on long-duration treasury ETFs like TLT. The widening spread between the 2-year and 10-year Treasury yields is a powerful historical indicator that has often preceded economic slowdowns, reinforcing our overall defensive posture. This pattern was seen clearly before the economic downturns in 2008 and 2020.
Finally, the breakdown in Bitcoin below $67,000 serves as a strong confirmation of the intense risk-off sentiment hitting every asset class. We view any short-term bounces in BTC or related equities like MSTR as opportunities to initiate fresh short positions or purchase puts. The recent destruction of over a trillion dollars in crypto market value demonstrates just how quickly this market can unravel when fear takes over.
