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Market Rotation Gains Steam as Investors Eye Small-Caps

Market Movers: The Opening Bell

January 16, 2026

Video Transcript

Let's get to the big story.

Breakdown.

While earnings season is underway.

Big banks and chip names driving market action this week.

Strong guidance from chip giant Taiwan Semiconductor lifted AI-related shares, and bank stocks rallied following solid earnings from major Wall Street players.

Investors also rotated into smaller companies, with the Russell 2000 outperforming the yuan Nasdaq, as well as the S&P 500.

Now the move reversed one day's decline when tech stocks dragged the broader market lower and reignited a shift away.

From mega caps to value names joining me this morning to weigh in is Peter Tuchman, senior floor trader at Trademarks.

Peter, happy Friday.

Friday.

Good morning, everybody.

Well, first and foremost, here we are at the 2nd full trading week of 2026 in the books.

So we saw record highs for the Russell 2000 yesterday.

So would you say there's a market rotation going on 100%.

I think it's like a repositioning of portfolios, you know, because I don't think people have a lot of clarity about what the next.

Of the market is going to be, we're sort of butting our heads up against some technical levels here, obviously.

Dow 50,000 and S&P 7000 have shown us a little bit of resistance, and it feels like they're not going to let us get there easily.

We're going to have to work for it.

That's kind of the feeling I get, and that happens sometimes, right?

It's just a technical move.

So what is the next thing that's going to catalyze this market higher and it's a little bit frustrating.

I think this week we're starting to see.

Obviously the Russell is trading a little bit higher and if it's curious enough, one day we were up a couple 100 points and the Spies were up and then one day we were down, but if you look at the advances versus declines, they've been 50/50 across the week and so that means to me that people are literally getting out of.

Some of their higher flyers and they're getting into some nice midcap small cap.

That's obviously what the Russell is and so people are looking for value.

They're taking a little bit of profits on their tech names and they're getting into some smaller midcap value which is fine.

Yes, and Peter, we're about to head into a holiday weekend, so that means markets will be closed next Monday.

So given everything that's happened this week from politics to geopolitics, we still saw gains for the major equity averages and given the elevated levels for the Dow, S&P 500, Russell 2000, what does this mean?

And can we expect more of an advance going forward?

You know what I would hope so.

We do know there's an old Wall Street adage that says as January.

So does the market for the rest of the year, right?

Historically, if you have a super solid January, it purports the rest of the year.

You and I have talked about seasonality for a long time and the market has not lived up to its seasonality expectations for a while now.

We know that September and October were supposed to be softer and they were really robust this year, and November was supposed to be the strongest month and it was by far not the strongest month.

You know what, look, I'm excited about the market going higher.

I'm just not sure what the next catalyst is going to be.

I think there are so many moving parts that are really not, we're not.

People are trying to put their teeth into something, and I'm not sure what it is.

Obviously there's a lot.

This morning I was sort of reading some of the news and really kind of worried whether we are going into Iraq, right?

I mean into Iran, excuse me, you know, so there's a lot of geopolitical unrest, right?

We're still not clear what the Venezuela's story was about and how that's affecting the energy markets.

We're not sure about what's going on in the Middle East.

That's another thing.

And so you know, taking that into account, then you've got earnings on the banks coming out of the gate which were mixed at best and then you've got that whole interest rate story and then there was that contentious spat that we had over the weekend which was real in a lot of different ways.

And so I think people are sort of sitting back sort of positioning themselves, but I think everybody.

Is in a little bit of a pause.

Are we inching a little bit higher?

Absolutely.

Are we getting closer to that wonderful S&P 7000 and Dow 50,000 level?

Absolutely.

Within 500 points in the Dow.

We at one point.

We were as close as 13 or 20 points in the S&P and the S&P.

So we're getting closer and closer.

I'm just not sure what the next move is going to be.

Yes, and you bring up an important point because we have talked on FinTech TV that markets don't like uncertainty.

So when we take a Back and look at the things we can be sure of.

It is a midterm election year in 2026 and in terms of the Federal Reserve, we know what to expect at least for the January meeting and next week Davos will be kicking off over in Europe and that is something that will be paying attention to, especially given the fact that global leaders and executives will be there.

So what are you paying attention to as the upcoming holiday shortened week comes?

So holiday.

Weekends leave a lot of uncertainty around because we know that 3 days where the news is just sort of rampant.

They're running around and we're going to be obviously there's potential for all kinds of catastrophes.

You know, I was speaking with Dan Ives last night actually because he is going to Davos and you know look historically we've had a lot of amazing things come out of Davos.

Some things are positive, some things are not so positive.

We do know going back to Trump 1.0 that that amazing day that I've called into question a number of times when Mr.

Trump mentioned China and tariffs, and we went down 1400 points that morning at 11 o'clock and we ended up closing up 1400 points.

That was a Davos experience.

So the thing about Davos is all eyes are on it.

Everyone is listening and you know whether it's Fed talk, whether it's global talk, whether it's geopolitical talk, whether it's, you know, I mean you're talking about what we did stir up by going into Venezuela was some of the most powerful countries in the world are all.

On edge about what that was all about.

You've got look who are the largest oil producers in the world.

You've got Venezuela, Iran, Russia, China, US, and I think that's it.

And so you know these are not, these are not our biggest buddies in the world.

And so everybody and as we look at Mr.

Trump, he's sort of positioning himself, you know, looking like he's making inroads into other countries, and I'm not sure these leaders are going to be that thrilled about that.

They don't particularly like that because going to be on edge, especially China and Russia, right?

And then Iran too.

We do see so much unrest in that country right now, you know, and as we watch that, it's pretty distressing.

So the whole the world seems like it's shifting, you know, and then how much effect is that going to have on our market?

I'm not that sure, but I think the interest rate thing is going to be one of the most pressing things.

Well, Peter, we will have to leave it there.

So you and I will be back here next Friday together.

So have a great weekend.

Thank you.

Happy trading, everybody.

In a wide-ranging conversation on the current market environment, Peter Tuchman, senior floor trader at TradeMas, shared his perspective on the market rotation taking shape during earnings season. His commentary offers a closer look at shifting investor behavior and what it could mean for portfolios as 2026 unfolds.

As earnings season gains momentum, markets have seen sharp moves, led in part by a strong rally in banking stocks following solid results from major Wall Street institutions. Technology has also remained in focus, with upbeat guidance from Taiwan Semiconductor fueling gains in AI-related names. At the same time, larger-cap stocks have struggled to maintain leadership, while smaller companies have begun to attract renewed interest. That shift has helped push the Russell 2000 ahead of both the Nasdaq and the S&P 500.

Tuchman said the trend reflects a meaningful repositioning by investors. “People are literally getting out of some of their higher flyers and they’re getting into some nice mid-cap, small-caps,” he noted. The move suggests a growing search for value and stability as uncertainty continues to shape the broader market backdrop.

From a technical standpoint, Tuchman pointed to key resistance levels that traders are watching closely, including Dow 50,000 and S&P 7000. Those thresholds have proven difficult to break, and he cautioned that progress will likely require patience and discipline. “It feels like they’re not going to let us get there easily,” he said, underscoring the need for thoughtful positioning as markets test these levels.

Tuchman also touched on the seasonal tendencies that often influence investor sentiment. Referencing the long-standing Wall Street saying, “As January goes, so goes the market for the rest of the year,” he expressed cautious optimism about the months ahead. Still, he acknowledged that geopolitical uncertainty remains a lingering concern that could disrupt momentum.

Global politics continue to play a critical role in market volatility. Tuchman highlighted potential flashpoints, including tensions involving Iran and developments among major oil-producing nations such as Venezuela, Russia, and China. These geopolitical dynamics add another layer of unpredictability, reinforcing the importance of staying alert as conditions evolve.

Looking to the near term, Tuchman noted that the upcoming holiday weekend could introduce additional uncertainty, a pattern traders are familiar with. Beyond U.S. markets, global events like the upcoming Davos meeting also carry weight. As world leaders and executives gather for high-level discussions, their messaging and outcomes could influence market sentiment in either direction.

With earnings reports continuing to roll in alongside technical resistance and geopolitical risk, Tuchman suggested investors remain proactive. He pointed to opportunities in mid-cap and value-oriented names while maintaining balanced exposure to larger-cap stocks as a way to navigate lingering uncertainty.

Overall, Tuchman’s insights offer a clear snapshot of a market in transition. His analysis highlights how earnings, technical levels, and global events are intersecting to shape investor behavior. For those willing to stay informed and adaptable, the current environment presents both challenges and opportunities as the market continues to find its footing in 2026.

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