How to Manage Risk as Market Sees Stark Repositioning
Small-caps pause while Big Tech recovers. Plus, building positions in Solaris Energy (SEI) and BridgeBio (BBIO).
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Market action is mixed on Wednesday morning, with roughly 43% of stocks trading in the green. The Magnificent Seven (MAGS) and the Nasdaq 100 ( (QQQ) ) are currently leading after lagging on Tuesday, while small caps (IWM) are seeing some red ink following their strong three-day run to open 2026.
The Macro Pivot
The rotational action and profit-taking we’re seeing are fairly mild, but investors are clearly repositioning. We are moving away from end-of-year window dressing and refocusing on macro matters.
Wednesday morning's data was a bit of a "good news is bad news" mix:
- JOLTS Job Openings dropped to 7.1 million, falling well below the expected 7.6 million — the second-lowest level in five years
- ISM Services PMI came in at 54.4%, stronger than expected and indicating continued expansion in the services sector
This combination of sticky services growth and a softening labor market has caused a drop in bonds, which started the day with a gap higher as yields adjusted.
Managing Risk/Reward
I am very focused right now on managing my positioning and preparing for whatever comes next. I am being more aggressive in cutting names that are struggling, but I am also hunting for stocks with strong fundamentals that offer attractive entry points.
One theme I’ll be discussing more in 2026 is my philosophy on position management. I am not a "buy-and-hold" investor. I am constantly adjusting my exposure. I use my "sell" button aggressively to manage risk and my "buy" button to increase it when the setup is right. I never view a trade as a single "all-in" or "all-out" event; I prefer an incremental approach.
I am incrementally adding to Solaris Energy Infrastructure (SEI) . Originally an oilfield services firm, Solaris has successfully pivoted to "Power-as-a-Service" (PaaS), providing mobile turbine power for the booming AI data center market.
The stock is relatively thinly traded for a $3.6 billion market cap, which can lead to the "random" intraday volatility I often mention. However, the institutional interest is growing:
- Morgan Stanley initiated coverage in December with an Overweight rating and a $68 target.
- The stock has tested the $55 level three times since September. I’m looking for a successful breakout on the next attempt.
- While it may need more consolidation, I want to build a core position now and add further if the breakout develops.
I am also rebuilding my position in BridgeBio Pharma (BBIO) . The company focuses on genetic diseases, led by its flagship heart drug Attruby, which continues to see strong sales growth.
BBIO was a big winner for me previously, and I successfully cut my exposure near the recent highs. After the biotech sector was hit hard on Monday, the stock has pulled back to a more attractive level.
- On Tuesday, Morgan Stanley initiated coverage with an Overweight rating and a $96 price target, citing a "diversified late-stage pipeline" and 20% upside.
- The company is expected to be a highlight at next week’s JPMorgan Healthcare Conference (January 12 to 15), where they will likely discuss strong commercial momentum for Attruby.
I have some cash on hand and intend to slowly increase these positions as I await further positive catalysts. I never make a single sale or buy; I scale as opportunities arise.
At the time of publication, DePorre was long SEI and BBIO
