Weekly Hotline: February 27, 2026
Investors continued to rotate out of higher risk sectors including Technology, Financials, and Consumer Discretionary (the three worst performing sectors of the week) and into more defensive sectors – as Utilities, Consumer Staples, and Health Care boasted the top returns of the week.
MACROECONOMIC UPDATE
- The Consumer Confidence Index inched up from 89.0 to 91.2 as consumer expectations for the near-term improved, but evaluations of the current economy faltered. The Present Situation Index dropped 1.8 points to 120.0 and the Future Expectations Index increased 4.8 points to 72.0. Even with this improvement in consumer evaluations of the near-term outlook, the Future Expectations Index still remains below the level of 80, which the Conference Board defines as a Recession Warning Level.
- The Producer Price Index (PPI) showed signs of reheating price pressures throughout the report as overall PPI increased 0.5% in January alone, and Core PPI, which excludes the volatile food and energy components, increased from 3.3% to 3.6% year-over-year. This increase can be attributed to a rise in prices for final demand services, as prices for final demand goods actually fell in January. It is important to note that PPI can be largely impacted by changes in margins and tends to be more volatile than consumer inflation measures like the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) Price Index. However, it does contain warning signs that the inflation battle is far from over.
TECHNICAL UPDATE
- InvesTech’s Artificial Intelligence (AI) Index fell more than -1.4% this week (through Thursdays close) as investors’ appetite for risk continued to dissipate. If the AI Index continues to fall, it would signal increasing weakness in investor bullish psychology and act as a warning that the broader market could also begin to stumble.
- Our InvesTech Gorilla Index was largely flat for the week as the mega-caps battle to remain on top. A continued decline to new post-peak lows in this critical index would confirm the warning from the AI Index and further signal that the broader market is in trouble.
INVESTECH MODEL FUND PORTFOLIO
There are no changes to the Model Fund Portfolio this week, which 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.
