INVESTECH MODEL FUND PORTFOLIO
Yesterday, February 12, 2026, we recommended the following change to our Model Fund Portfolio:
A further decline in our Gorilla Index along with renewed weakness in our AI Index this week signaled that internal market stability is faltering. With these technical warnings growing louder, we recommended the following defensive update to our already resilient Model Fund Portfolio:
- Increase the Direxion Daily S&P 500 Bear 1X ETF (Symbol: SPDN) from 5% to 7%. We are incrementally raising portfolio defenses with this S&P 500 inverse index fund. For more information about inverse index funds or to see alternative options to SPDN, please see The “Bare Necessities” About Bear Funds in the Subscriber Library.
Following this change, the Model Fund Portfolio is comprised of 58% long positions, 7% in an inverse index ETF, 5% in an intermediate Treasury ETF, and 30% cash held in short-term Treasurys or a money market fund. This results in 51% net equity exposure.
MACROECONOMIC UPDATE
- The National Federation of Independent Businesses (NFIB) Small Business Optimism Index was relatively unchanged, ticking down from 99.5 to 99.3. At the same time, the Uncertainty Index increased significantly as business owners continued to grapple with economic changes and price pressures.
- On the surface, the Jobs Report showed signs of easing weakness in the labor market as the Unemployment Rate ticked down from 4.4% to 4.3% and 130,000 jobs were added in January. Annual revisions included in the report, however, told a very different and more concerning story (see Market Insight).
- Existing Homes Sales plummeted -8.4% in a problematic development for the housing market – sending a warning shot across the bow of the housing market (see Market Insight).
- The Consumer Price Index (CPI) showed cooling inflation with the overall rate dropping from 2.7% to 2.4%. The core rate, however, only declined from 2.6% to 2.5% as inflation excluding the volatile food and energy components remains stuck above the Fed’s 2% target.
TECHNICAL UPDATE
- InvesTech’s Gorilla Index fell decisively this week and is now -12% from its high in late October 2025. This confirmed the breakdown in the AI Index, Canary Index, and Bitcoin signaling that broad market losses could intensify.
- Downside leadership has increased and internal data shows that bearish Distribution could begin to appear in our Negative Leadership Composite (NLC) in the next few weeks. This would further confirm that the market is in for a rough road ahead.