Weekly Hotline: September 4, 2026
Stocks experienced significant swings in both directions this week as rising bond yields, tensions in the Middle East, and rapidly shifting Fed rate expectations kept investors on their toes.
MACROECONOMIC UPDATE
- The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) ticked down from 55.6% to 54.6% as it remained in expansion territory (>50%). The Prices index remained extremely elevated at 71.1% as costs continued to increase.
- The ISM Services PMI rose from 54.1% to 55.4%, also remaining in expansion. Meanwhile, the Prices component showed costs rising faster as it increased from 70.3% to 72.6%, and the Employment component remained in contraction (<50%) at 47.8%.
- The Jobs report for August came in stronger than expected as 162,000 jobs were added and the Unemployment Rate was unchanged at 4.1%. The stability in the labor market puts pressure on the Fed to focus on the price stability side of their mandate and pushes rate hike expectations higher.
TECHNICAL UPDATE
- Bearish Distribution in the InvesTech Negative Leadership Composite (NLC) moved to -24 as downside leadership resumed its acceleration. This is an essential indicator to watch, and if Distribution moves to -100 it will be a critical warning that a bear market could be near.
- On the other hand, the Gorilla Index briefly hit a new high for the first time in nearly a year as mega cap stocks clawed their way back. The combination of accelerating distribution and the possible stabilization of Gorilla stocks has created a technical “tug-of-war” that will be crucial to watch over the coming weeks.
INVESTECH MODEL FUND PORTFOLIO
There are no changes to the Model Fund Portfolio this week, which is comprised of 62.5% long positions, 5% in an inverse index ETF, 5% in an intermediate Treasury ETF, and 27.5% cash held in short-term Treasurys or a money market fund. This results in 57.5% net equity exposure.
