February 13, 2026

The DJIA and S&P 500 flirted with record highs as the week started, benefiting from a rotation into cyclical and 'old school' stocks. The NASDAQ recovered some losses on Monday after the prior week's selloff in technology shares led by strength in semiconductors and a bounce in software stocks after a couple of brutal weeks. The iShares Tech-Software ETF (IGV) is down more than 30% from its October high. The NASDAQ's bounce was short-lived however, as more selling in tech and the Mag 7 sent the tech heavy index on a four-day losing streak. The broader market was able to post modest gains early in the period with the DJIA, NYSE and Equal-Weight S&P 500 setting new record highs on Tuesday. Concerns over disruption to certain industries from AI midweek however, rattled investors and the major averages tumbled into Friday. Besides software, selling in brokerage firms, wealth management, commercial real estate and transportation logistics sent the different indexes sharply lower on Thursday. A softer inflation print in the CPI on Friday pushed yields lower and equities higher but not enough to erase the week's drop. The yield on the 10-year Treasury rate closed the period at 4.055%, down from 4.241% at the start of the week.  A rotation into defensive sectors helped stem the selloff with Utilities (XLU) posting a new high on Friday, with Materials (XLB), REITs (XLRE) and Consumer Staples (XLP) also outperforming. Financial (XLF) was the weakest market group, down -4.81%, with Consumer Discretionary (XLY), Communication Services (XLC) and Technology (XLK) also red. Earnings were a hit and miss as Marriott International (MAR), McDonalds (MCD), Zebra Technologies (ZBRA) and American Electric Power (AEP) traded higher on beats, while investors continued to crush companies  that disappointed including AppLovin (APP), CH Robinson (CHRW), Baxter (BAX) and Mattel (MAT). Precious metals recovered from the dip in early February, while crude oil prices closed the week nearly flat despite midweek volatility on mounting tension between the US and Iran. Prices were mixed ahead of the weekend, but the different indexes finished mostly lower with the NASDAQ on a five-week losing streak, its longest since 2022, while the S&P 500 was down for a second straight week. The DJIA closed in the red, but the DJ Utility Index was able to post a new all-time high as the period ended. Next week the NYSE is closed on Monday for President's Day, but the economic calendar includes data on housing and manufacturing.

For the period, the DJIA lost 614.74 points (-1.2%) and settled at 49500.93. The S&P 500 fell 96.13 points (-1.4%) and closed at 6836.17 The NASDAQ dropped 484.54 points (-2.1%) finishing at 22,546.67. The small cap Russell 2000 slipped 23.64 points (-0.9%) and settled at 2646.70.

Market Outlook:The technical condition deteriorated during the week with the major averages closing lower across the board. However, the overall picture remains mixed, with bullish signals in some areas being offset by bearish signs in others. The DJIA, NYSE, Equal-Weight S&P 500 and DJ Utility Index all hit new highs during the week supported by mostly positive underlying breadth. The NYSE Advance/Decline line, often viewed as a leading indicator of market direction, also recorded several new highs confirming a rotation into cyclical sectors. The DJIA remains above key MA support levels while the S&P 500 found support at its January and February lows bouncing off its 100-day MA on Friday. That leaves a mixed technical signal as the bellwether index remains stuck below its 50-day MA. The NASDAQ is trading below its 50 and 100-day MA and is in a bearish chart pattern of lower highs and lower lows since mid-January. The technical indicators are in neutral ground for the blue-chips but range from neutral to bearish for the S&P 500 and NASDAQ. In addition, the ADXR indicator shows the downtrend in the NASDAQ is strengthening. The VIX, a trader's fear index, backed off to a more neutral setting midweek before settling at 20.60 on Friday as fears of a broader market selloff remained contained as yields nudged lower. After the CME Group FedWatch pegged the probability of a June rate cut at 48% on Thursday, it jumped to a 70% after Friday's inflation report. That brought buyers into small caps with the Russell 2000 jumping +1.18% ahead of the weekend. Finally, crosscurrents are also seen in the different sectors. This week, six of the 11 sectors hit new highs, including Consumer Staples (XLP), Energy (XLE), Industrial (XLI), Materials (XLB), REITs (XLRE) and Utilities (XLU), with a seventh, Healthcare (XLV) close to breaking out to a new high. Looking weak are Communication Services (XLC), Technology (XLK) and Consumer Discretionary (XLY), which are trading below their respective 50 and 100-day MA's, while Financial (XLF) dropped below its 200-day MA and is back where it was in November. The sector divergence underscores the intense rotation that's been occurring beneath the market's surface. 

A chart of these indicators can be found by going to the Market Edge Home page and clicking on Market Recap, which is on the right-hand side of the page just below the Second Opinion Status numbers.

Cyclical Trend Index (CTI):The underlying premise of the CTI is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves. There are five identifiable cycles, each with different time durations at work in the market at all times. 

Currently, the CTI is Negative at -3, down six notches from the previous week. Cycles A, C and D are bullish, while Cycles B and E are bearish. The CTI is projected to remain in a negative configuration through March.

Momentum Index (MI):The market's momentum is measured by comparing the strength or weakness of several broad market indexes to the DJIA. Readings of -4 and lower are regarded as bearish since it is an indication that a majority of the broader based market indexes are weaker than the DJIA on a percentage basis. Conversely, readings of +4 or higher are regarded as bullish. 

The Momentum Index is Neutral at +0, down two notches from the previous week. Breadth was positive at the NYSE as the Advance/Decline line gained 1565 units while the number of new 52-week highs exceeded the number of new lows on each session. Breadth was mixed at the NASDAQ as the A/D line lost 1073 units while the number of new highs out did the new lows on three of the five days. Finally, the percentage of stocks above their 50-day moving average rose to 58.7% vs. 54.4% the previous week, while those above their 200-day moving average increased to 66.4% vs. 65.4% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

Underlying market breadth was mixed during the period with the NYSE Advance/Decline Line, a leading indicator of market direction, closing at another new high on Friday. That confirms that outside of tech, stocks are under accumulation. New 52-week highs continue to dominate the NYSE, and despite the NASDAQ falling for four consecutive days saw expanding new highs with more new highs than lows on three of the five sessions. As mentioned, the last few weeks, without the overweighted big cap tech shares staging a rebound the NASDAQ may struggle to make much headway going forward.

Sentiment Index (SI):Measuring the market's Bullish or Bearish sentiment is important when attempting to determine the market's future direction. Market Edge tracks thirteen technical indicators listed below that measure excessive bullish or bearish sentiment conditions prevalent in the market. The Sentiment Index is Negative at -4, up a notch from the previous week. 

Investor sentiment is bullish with little change in the percentage of bulls in the different surveys. The recent volatility however, may have rattled retail investors. The American Association of Individual Investors (AAII), saw a slight dip in retail bulls to 38.5% from 39.7%, but retail bears jumped to 38.1% from 29% a week ago. That's the highest percentage of bears since the last week of November 2025. The National Association of Active Investment Managers (NAAIM) Exposure Index saw the professionals take a little more off the table for a second week falling to 80.6% while the Percentage of Bullish Investment Advisors eased to 59.6%.

Market Posture:Based on the status of the Market Edge, market timing models, the Market Posture is Neutral as of the week ending 02/13/2026 (DJIA - 49500.93). For a closer look at the technical indicators and studies that make up the market timing models, check out the tables located below.

Industry Group Rankings:What's Hot (23) - What's Not (7): The following are the strongest and weakest Industry Groups for the period ending 2/12/26. Strongest: Metals & Mining, Chemicals, Transportation, and Building Materials. Weakest: Technology Services, Media, Financial Services and Insurance. To review all the Industry Group rankings in the Market Edge universe, click on the Industry Group tab.

ETF Center:The top performing ETF categories for the week ending 2/12/26 were: Specialty Technology (+4.67%), Sector-Basic Materials (+4.57%), International-Ex. Europe (+3.79%), Sector-Energy (+3.64%) and Specialty Real Estate (+3.58%). The weakest categories were: Specialty Financial (-3.71%), Sector-Internet (-3.05%), Commodity-Energy (-1.05%) and Shorts (-0.63%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT