Stocks were mixed this week as market leadership rotated away from overpriced Technology stocks towards value segments. Additionally, the Fed lowered rates, but indicated that the likelihood of further cuts in 2026 continues to be uncertain.
MACROECONOMIC UPDATE
- The National Federation of Independent Business (NFIB) Small Business Optimism Index ticked up from 98.2 to 99.0. This was driven by an increase in expected sales, while uncertainty also rose among business owners.
- The Leading Economic Index (LEI) from the Conference Board was released for September following a long delay due to the Government Shutdown. The index fell -0.3% as expectations from both consumers and businesses weakened. This indicates that economic growth is likely to slow through the end of the year and into early 2026.
TECHNICAL UPDATE
- InvesTech’s Housing [Bubble] Bellwether Barometer whipsawed this week falling back to the warning support level before bouncing on the news of the latest Fed rate cut. If this indicator falls back definitively below this support level, it will be a key warning that the housing market is on unsteady ground and further weakness likely lies ahead.
- The critical technical development this week came from InvesTech’s Negative Leadership Composite (NLC) as bearish Distribution eased back to 0. This indicates that imminent downside risk is subsiding. A new value position was added to the Portfolio in response to this indication. Read the Portfolio Update here.
InvesTech Model Fund Portfolio
Following the change in the InvesTech Model Fund Portfolio this week, its net invested equity allocation is 53%. This is comprised of 58% long positions, 5% in an inverse index ETF, 5% in an intermediate Treasury ETF, and 32% cash held in short-term Treasurys or a money market fund.