Weekly Hotline: October 30, 2026
Information Technology stocks fell sharply this week as disappointing earnings reports from multiple major players exposed growing cracks in the AI trade. At the same time, defensive and value-oriented sectors like Consumer Staples and Health Care demonstrated strength as investors rotated toward more resilient areas of the market.
MACROECONOMIC UPDATE
- New Home Sales ticked down -0.6% in September as the housing market remains stagnant in the face of elevated mortgage rates.
- Consumer Confidence rose 7.5 points to 91.7 as attitudes improved on a brief reprieve in gas prices. Even with this increase, the Index remains below the level of four months ago.
- The Personal Consumption Expenditures (PCE) Price Index continued to show increasing inflation as the overall annual rate came in at 3.6%, up from 3.4% the prior month. The Core PCE index, which excludes the volatile food and energy components, rose at a rate of 3.1%, up from 3.0%. Both measures remain well above the Fed’s 2% inflation target. Despite continued inflationary pressures, the Fed decided to hold off on an additional interest rate hike this week. This sets the stage for a crucial meeting in December as the Fed Battle rages on.
TECHNICAL UPDATE
- The InvesTech Negative Leadership Composite (NLC) remains below the critical warning threshold of -100, signaling that the market is extremely vulnerable to a downturn.
- The InvesTech Gorilla Index has fallen for six consecutive days, and it is on track for another loss today. The sustained weakness in these mega-cap leaders is a sign that the top heavy S&P 500 Index could be losing steam.
INVESTECH MODEL FUND PORTFOLIO
There are no changes to the Model Fund Portfolio this week, which remains defensive and is comprised of 62.5% long positions, 8% in an inverse index ETF, 5% in an intermediate Treasury ETF, and 24.5% cash held in short-term Treasurys or a money market fund. This results in 54.5% net equity exposure.
