The 2026 Sector Scorecard

Good morning. Let’s get into it.

After the semiconductor bottlenecks framework we discussed last week, the obvious next question is: where do you diversify in 2026 beyond tech?

The key point is this: you know the market is already rotating, as I discuss this almost daily in my Morning Market Updates since the Dec 13th rate cut, but it is not rotating evenly.

In January, the S&P 500 (white) was up 1.45%, but the rally broadened: S&P MidCap 400 (blue) +4.05% and S&P SmallCap 600 (green) +5.61%, while the S&P 500 Top 50 (orange) was -0.47%.

Of course, leadership broadening does not just mean “go buy small cap.”

Rather, we want to uncover exactly which sectors are gaining momentum and still have runway outside of tech.

To answer that, I score every sector using a multi-factor rubric so you can position with new leadership as it develops, not after the headlines catch up.

What this letter covers:

• The exact multi-factor rubric used to rank every S&P sector

• The full sector scorecard (price, trend, and forward setup)

• The top three sectors based on composite ranking

• Explicit trade expressions and portfolio weights

• Clear invalidation triggers