Friday, February 20, 2026

Supreme Court Rules Against Tariffs … GDP … PCE Prices … Momentum Trading DOW Stocks & ETFs … Stock Market Analysis

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.” - Peter Lynch, former manager of Fidelity’s Magellan® fund.
   
"This is maybe the most dangerous market of my career, and that includes 1987's crash, that includes the savings and loan debacle market of the early '90s, that includes the 1999 to 2009 lost decade in the S&P 500 in the dot-com bubble. This is the most difficult market of my 45 years." -  Bill Smead, Smead Value Fund (SMVLX), May 2025.”
 
DEMOCRATS MAY HAVE ALREADY LOST 2028 PRESIDENTIAL RACE (WSJ)
“Every Democrat preparing to run has weaknesses. At this writing, only two potential candidates have double-digit support in the RealClearPolitics polling average. Both are vulnerable. Former Vice President Kamala Harris leads with 31%, followed by California Gov. Gavin Newsom at 22%. From there, the drop-off is steep. Former Transportation Secretary Pete Buttigieg is in third place with 9%. Rep. Alexandria Ocasio-Cortez is close on Mr. Buttigieg’s heels. The only other Democrat to earn more than 5% in national polls is Pennsylvania Gov. Josh Shapiro…
…Only 8% of Democrats call themselves conservative, according to Gallup. Fifty-nine percent consider themselves liberal or very liberal. A CNN poll last summer found that one-third of Democrats and Democratic-leaning independents think of themselves as democratic socialists like Ms. Ocasio-Cortez. That share is 42% among those under 35.” Opinion at…
My cmt: The Democrats gave us Trump because they couldn’t nominate a viable candidate. If they had run Joe Manchin, Trump would have been a two-time loser. But Manchin was a moderate so they forced him out of the party. Howard Schultz, founder of Starbucks, explored running as a Democrat years ago, but the Dems didn’t want a moderate then either. If they run Kamala again, or another far left candidate, Newsome or Ocasio-Cortez, one can only pray that the Republicans run a sound candidate such as Nikki Haley.  We don’t need a boot-licking MAGA nut-job as a future president. An improved race? Spanberger (D) vs. Glenn Youngkin (R), both Governors of Virginia, present and past.
 
SUPREME COURT RULES AGAINST TARIFFS (CNBC)
“Stocks gained on Friday after the Supreme Court ruled against President Donald Trump’s tariffs, potentially providing relief for companies burdened by higher costs from the duties and easing concern about sticky inflation still plaguing the U.S. economy…Economists expect the White House to reapply many of the same tariffs using other means.” Story at…
 
TRUMP’’S NEW TARIFFS (CNBC – 1:41PM)
“President Donald Trump said he will sign an executive order imposing a new 10% “global tariff” under Section 122 of the Trade Act of 1974.” Story at…
An AI google search said this about Section 122…
“Section 122 of the Trade Act of 1974 (19 U.S.C. § 2132) authorizes the U.S. President to impose temporary import surcharges of up to 15% or import quotas to address "large and serious" balance-of-payments deficits. These measures are temporary, expiring after 150 days unless extended by Congress.”
 
FINANCIAL CRISIS RED FLAGS (Markets Insider)
“In a LinkedIn post on Thursday, the former PIMCO CEO [Mohamed El-Erian] flagged a Financial Times report that said private credit giant Blue Owl Capital is permanently halting withdrawals in its Capital Corporation II fund, a private debt fund that's open to retail investors.
That move could be seen as a parallel to what happened in the months leading up to the last financial crisis, El-Erian said. In August 2007, BNP Paribas froze three of its funds due to a decline in liquidity in the securitization market, which made it impossible to "value certain assets fairly," it said at the time.
Nearly two decades after the Great Financial Crisis, BNP Paribas's move is regarded by some as the start of the downturn that led to the collapse of Lehman Brothers the following year.” Story at…
 
GDP (CNBC)
“U.S. growth slowed more than expected near the end of 2025 as the government shutdown impacted spending and investment, while a key inflation metric showed high prices are still a factor for the economy, according to data released Friday.
Gross domestic product rose at an annualized rate of just 1.4%...” Story at…
 
PCE PRICES (Fox Business)
“The Federal Reserve's preferred inflation gauge remained elevated in December as price pressures continued to pose a challenge for consumers. The Commerce Department on Friday reported that the personal consumption expenditures (PCE) index rose 0.4% in December on a monthly basis and is up 2.9% from a year ago.” Story at… 
My cmt: Both worse than expected.
 
-Friday the S&P 500 rose about 0.7% to 6862
-VIX declined about 6% to 19.09.
-The yield on the 10-year Treasury rose to 4.086% (compared to about this time prior market day).
 
MY TRADING POSITIONS
XLK – SOLD 2/11/2026
SPY – Added 12/1/2025.
NVDA – Added 12/1/2025 & 2/6/2026
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
At the close today, of the 50-Indicators I track, 10 gave Bear-signs and 11
 were Bullish. The rest are neutral. (It is normal to have a lot of neutral indicators since many of the indicators are top or bottom indicators that will signal only at extremes.)
 
TODAY’S COMMENT
The daily, bull-bear spread of 50-indicators improved to +1 (1 more Bull indicator than Bear indicators), a NEUTRAL indication. I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread (purple on the chart above) that smooths daily fluctuations reversed higher, a BULLISH sign.
 
It was nice to see the 10-day, indicator-spread turn higher.  I’ll be watching that trend. It may suggest an end to the weakness,
 
PCE prices, the Fed’s preferred inflation gauge, was higher; GDP was an anemic 1.4%, nearly half the expected value; … and the stock market closed higher? Interesting. Investors apparently put a high value on the possibility that tariffs will end. It is not at all clear that tariffs will end; there are other tariff authorities in the law, but Trump may need help from Congress.  In the end, when the market goes up on bad news it’s a good sign, but I am not convinced, yet. Let’s see if markets are still ignoring the GDP/Inflation news on Monday.
 
The waiting game continues. Since the end of October, the S&P 500 has gone nowhere – it’s down about 0.5%. It did break back above the 50-dMA today; it is now 0.2% above the 50-day.
 
Levels of support are the 100-dMA and the 200-dMA: The S&P 500 is 1.3% above the 100-dMA and 5.8% above the 200-dMA.
 
BOTTOM LINE
I am upgrading to neutral on the markets.
 
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:
 
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.
*For additional background on the ETF ranking system see NTSM Page at…
 
DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
 
 
The top ranked Stock receives 100%. The rest are then ranked based on their momentum relative to the leading Stock.
For more details, see NTSM Page at…
 
FRIDAY MARKET INTERNALS (NYSE DATA)
My basket of Market Internals remained HOLD. (My basket of Market Internals is a decent trend-following analysis that is most useful when it diverges from the Index.) 
 
 
 
 
My invested position is about 55% stocks, including stock mutual funds and ETFs. 50% invested in stocks is a normal, conservative position for a retiree. (80% is my max stock allocation when I am confident that markets will continue higher; 30% in stocks is my Bear market position.)
                                              
I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here although I don’t trade as much as I used to. When I see bullish signs, I add a lot more stocks to the portfolio, usually by using an S&P 500 ETF as I did back in October 2022 and 2023.
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