Capital Rotation Persists as AI Spending, Dollar Weakness, and Metals Lead

Pre-Market

Markets remain constructive at the index level, but participation continues to narrow. Capital is favoring tangible assets, infrastructure, and select industrial exposure while software-heavy leadership remains uneven.

This reflects an ongoing repricing of risk rather than a short-term reaction.

AI Investment and Cost Discipline

Corporate restructuring activity continues to highlight a clear divide between AI infrastructure providers and AI adopters. Capital remains more supportive of companies enabling compute and capacity buildout, while end users focus on efficiency and margin protection.

The distinction between builders and users remains an important filter.

Dollar Weakness and Capital Allocation

The dollar remains under pressure, with capital increasingly bypassing traditional currency hedges and reallocating toward hard assets. Precious metals continue to benefit as longer-term fiscal credibility remains in question.

Flows suggest a preference for real assets over duration exposure.

Federal Reserve Backdrop

Expectations for the January meeting remain stable. Further out, futures continue to price potential easing later in the year. More notably, term premium pressure reflects ongoing uncertainty around policy constraints rather than immediate rate changes.

Markets continue to price uncertainty rather than outcomes.

Key Takeaways for Preparation

• Dollar weakness remains a multi-week theme

• AI exposure requires selectivity, particularly within infrastructure

• Precious metals retain leadership, though momentum management remains important

Market Structure

Primary index trends remain intact, though leadership remains selective. Rotation continues to explain relative performance rather than broad risk reduction.

• Materials, energy, and industrials align with macro and geopolitical flows

• Technology shows signs of re-engagement following consolidation, though dispersion remains elevated

Patience through consolidation has preserved flexibility as directional opportunities re-emerge.

Economic Calendar

Wednesday:

• Crude Oil Inventories

• Federal Reserve Rate Decision

• FOMC Press Conference

Earnings Highlights

Before the open: ASML, GLW, APH, SBUX, GD, OTIS, DHR, ADP

After the close: META, MSFT, TSLA, IBM, NOW, LRCX

Meta Platforms

Primary Focus

Market response is likely to center on 2026 capital expenditure guidance. Elevated spending trajectories may continue to face investor scrutiny as capital discipline remains a priority.

Advertising Base

The core advertising business remains structurally supportive, with scale and optimization continuing to fund broader initiatives. This segment remains central to cash flow stability.

Reality Labs

Recent cost actions suggest a reassessment of longer-term allocation priorities. Clarity around strategic focus is likely to matter more than near-term variability.

Tesla Inc.

Current Setup

Automotive delivery and margin trends remain challenged, reinforcing that vehicle fundamentals are not the primary valuation driver at this stage.

Optionality Narrative

Valuation sensitivity remains tied to autonomy, robotics, and platform development. Execution and timelines continue to represent the primary uncertainty.

Energy Segment

Energy storage deployment continues to scale with structurally higher margins. This segment increasingly contributes to valuation support.

Sector Rotation

• Leading: Gold, Silver, Basic Materials

• Constructive: Energy (selective), Industrials

• Lagging: Software-heavy technology groups

Extended moves warrant patience. Pullbacks into established structure remain the preferred focus.

Industry Group Trends

Relative Strength

• Semiconductors

• Aerospace & Defense

• Specialty Chemicals

• Diagnostics & Research

• Oil & Gas Equipment & Services

Relative Weakness

• Software Infrastructure

• Software Applications

• Credit Services

• Entertainment

Market Preparation

Primary Watchlist:

AMD, GOOGL, AMZN, COIN, JPM, TSLA, CVX, XOM, AAPL, BA, CAT, NVDA

Focus Name: Boeing

Price continues to respect higher-timeframe reference levels. Intraday volatility reinforces the importance of aligning execution with primary trend structure.

Counter-trend positioning remains lower probability under current conditions.

👉 Want real-time alerts on these levels? Join the ZenTrader Discord.