5 Things We Learned This Week - 2/22/2026
February 22, 2026
The S&P 500 rallied 1.1% this week. The Bloomberg Aggregate Bond Index fell 0.1%, Gold rose 1.3% and Bitcoin fell 1.4%.
Fourth-quarter GDP grew at a 1.4% annualized rate, undershooting expectations for roughly 2.5%. Empire State manufacturing held in modest expansion, with the headline index at 7.1, a touch above forecasts. Initial jobless claims fell to 206,000 for the week, underscoring persistent labor market tightness. Industrial production hit a cycle high, while core PCE inflation firmed near 3%, modestly above expectations. Overall, the data depict cooling output amid a tight labor market and sticky inflation, which complicates the case for incremental monetary policy easing.
Technical Market Update
In our last 5 Things, we said the market would likely incur an extra dose of selling pressure from systematic funds. The market is basically flat since then, and there probably won't be as much automatic selling going forward. Thus, we upgraded our tactical market view at the end of this week and made several new investments.
The S&P 500 has been trading in a narrow price band so far this year, ping ponging between support near 6,800 and resistance around 7,000. This prolonged consolidation has allowed daily moving averages to catch up to current prices, creating stronger underlying support and reducing the risk of sharp pullbacks. Momentum indicators that were overbought heading into last November have worked off during the sideways action. Relative strength index (RSI) levels are now neutral, effectively reloading bullish momentum and setting the stage for potential upward moves.
We have been on guard for a market correction recently due to the volatility breakouts we've seen in assets like precious metals, crypto, and the technology sector. The Magnificent 7 stocks have also been weak since the Fall, which is always a technical risk we monitor closely because it's hard for the market to leap higher without their participation. However, this week the Mag 7 stocks registered their first daily and weekly DeMark relative buy signals versus the broader S&P 500 in months. Given those signals, we added exposure to the group.
Recent volatility stimulated a preference shift in the stock market away from growth and high beta equities toward more defensive, blue-chip securities. Amid that rotation, however, the overall trend in the S&P 500 has managed to remain above key support levels. The bears had a great opportunity to take firm control of the market in recent weeks, but have thus far failed to do so. Time appears to be running out.
The systematic positioning setup isn't great, but it's far from dire. Volatility control funds are now well off the peak exposure levels from last year, which leaves room for upside accumulation if stocks regain upward momentum. CTA positioning is also off peak levels and could go either way from here.
Investor sentiment is another technical factor we monitor closely. The CNN Fear Greed Index currently resides in the "Fear" zone, which is usually a contrarian bullish signal. Widespread fear is bullish because it means there's a lot of room for attitudes about the market to improve, and that's what stimulates new buyers. While different sentiment surveys are always somewhat mixed, we think there are catalysts for sentiment to improve in the coming weeks. Corporate earnings remain strong, and this week's tariff news is probably going to nudge animal spirits higher (see story #2).
The main risk we will monitor in the coming weeks relates to the military buildup in the Middle East. If the US attacks Iran and oil prices spike considerably, we will take defensive action and reconsider our tactical plan. That said, until we see definitive bearish confirmation signals (i.e. a break below 6,700 on S&P 500), we will presume the bulls remain in charge.
The Supreme Court's Tariff Decision Is Bullish
This week, the Supreme Court struck down President Trump’s “Liberation Day” tariffs and other IEEPA-based duties, ruling 6–3 that the administration exceeded its authority. The majority’s logic was straightforward: tariffs function like taxes, and taxes require clear congressional authorization. The White House is already floating a Plan B to still enact tariffs, so the story will drag on from here. But the court's decision is at least modestly bullish going forward, because tariffs aren't having a desirable impact on the economy.
Tariffs are supposed to help US manufacturers regain market share, yet the ISM Manufacturing PMI has shown overall contraction during Trump's second term. The average reading was 49.1 over the 12 months from February 2025 to January 2026, which is below the long-term average of 52.8 since 1948. This manufacturing has been weaker than normal on Trump's watch. Moreover, the US has lost manufacturing jobs since President Trump's return to office. Based on seasonally adjusted data from the BLS, manufacturing employment has declined by a net 83,000 from January 2025.
Tariffs aren't helping improve the inflation situation, either. Why? Because tariffs are a consumption tax in disguise! When the government slaps a 15% duty on imported goods, importers pass most of that cost along. Consumers pay more at checkout. Businesses face higher input costs. Real incomes get squeezed at the margin. Empirical research shows tariff costs have been largely passed through to higher consumer prices, with low-income households experiencing the largest real-income hits. This helps explain today’s fragile consumer mood, where sentiment is unusually weak relative to headline growth.
Public opinion polls reflect the economic strains imposed by tariffs. Recent surveys show over 60% of Americans disapprove of Trump’s tariffs, while only about one-third approve. Therefore, investor sentiment should improve as a result of this week's Supreme Court ruling.
If You Believe In Aliens, There's An ETF For That
If E.T. phoned home today, Wall Street wouldn’t panic — it would launch a product. That’s essentially the idea behind the Tuttle Capital UFO Disclosure ETF (UFOD). The pitch? If the U.S. government confirms it possesses non-human technology, certain aerospace and defense stocks could surge. Why wait for the mothership when you can front-run the landing? It’s clever. It’s timely. It’s also a fascinating case study in how far thematic investing has evolved.
The main analytical tension point with this ETF is its suspect construction methodology. Alien disclosure isn't something anyone can backtest, because it's never happened before. We can't build a reliable cash-flow model. It’s a provocative event risk, sure. But earning excess returns from such an event requires a highly uncertain scenario analysis.
Assets under management in thematic ETFs have expanded dramatically, with global thematic AUM reaching around $779 billion. Thematic funds often have sexy stories attached to them, but performance cycles in individual thematic ETFs are usually volatile and the numbers are sobering. Nearly half of thematic funds don’t last ten years. Of the survivors, fewer than 20% managed to outperform the broad stock market.
There are times when thematic ETFs can be useful tools, particularly if they are tied to durable economic shifts. But whenever an ETF emerges that hinges on a speculative catalyst such as aliens landing in Times Square, or the metaverse suddenly becoming mainstream, investors should be skeptical. Storytelling has always sparked speculation on Wall Street, but speculators don't usually beat fundamentally-focused investors over the long run. To learn more about the new UFO-themed ETF, and a Catholic Values ETF that paradoxically counts Meta as one of its largest holdings, you can read Michael's recent Forbes article.
By the way, in case you didn't hear—President Trump formally told the Department of Defense to release all their classified files on alien technology after the market close on Thursday. And how did UFOD perform the following day? It went down 1.1%, badly lagging the S&P 500. Oops.
Intuit Thesis To Own
“Nothing is certain except death and taxes,” according to Benjamin Franklin. If you listen to today’s market chatter, though, you might think we’ve added a third certainty: the death of software. Investors have treated the sector as if disruption is preordained and margins are destined to evaporate. That explains why a stock like Intuit (INTU)—historically a steady compounder—is down 53% from its high.
Intuit provides software that serves small and medium sized businesses, consumers, and accounting professionals. The company's TurboTax product dominates the do-it-yourself market for assisted tax filing. QuickBooks anchors many small-business accounting needs, while Mailchimp drives marketing automation, and the Credit Karma division extends Intuit's reach into personal finance.
Intuit owns a high-quality franchise. Revenue is growing in the mid-teens at scale, which outpaces the median level of large-cap software peers. Profitability is also elite. Return on Invested Capital (ROIC) is over 16%, which is about double the peer group average, while operating margins are close to 30%. Morningstar assigns Intuit a "Wide Economic Moat" rating, based on the company's high customer switching costs, trusted product brands, and decades of proprietary tax and accounting data embedded into its platform.
Sasan Goodarzi became Intuit's CEO on January 1st, 2019. A few months later, in October 2019, the company announced a strategic and transformational shift to become an AI-driven platform. That was more than six years ago and well before ChatGPT came out in November 2022. Thanks to the management team being ahead of the curve on AI adoption, Intuit already has developed its own generative AI operating system called GenOS, which includes large language models specialized in finance-related tasks like taxes, accounting, and marketing. Execution risks remain, but there is a strong chance this technology will soon fuel higher average revenue per user and overall sales growth, which means the AI threat to INTU is probably overstated.
At the current share price of $380, Intuit fits Silverlight's Quality at a Discount stock selection criteria. The stock trades near its cheapest valuation in over a decade, with a P/E at about 15 times forward earnings. That's not only cheaper than the S&P 500 average, but also well below the 33.9x forward P/E the stock has averaged over the last 5-years. Technically, we perceive the shares to be severely oversold, which presents a favorable risk/reward setup going forward. When fear peaks, opportunity often follows. Silverlight purchased shares of Intuit for clients in our Core Equity strategy this week.
How Video Games Have Changed
The screen flashes bright red—your character falls in battle—but within seconds, you’re back in action, ready to try again. Today’s video games are built for speed and reward — instant respawns, checkpoints, and constant dopamine surges that keep players hooked in fast-paced loops of effort and reward. Failure is temporary, barely an inconvenience.
Back in the days of The Legend of Zelda or Metroid, video games were quite different. Losing a virtual life meant starting over. Players spent hours retracing their steps, rebuilding inventories, and memorizing secret passages. Those games tested your patience and grit. Victory came from persistence and painstaking repetition.
The shift in video game design mirrors generational shifts in mindset. Gen X grew up in a world that frequently demanded endurance and self-reliance. That's why Gen Xers often exhibit loyalty and perseverance—traits forged in a Nintendo world of limited lives.
Millennials and Gen Z inhabit a different world that prioritizes adaptability. When they fail in the games they grew up playing, they simply reboot, adjust, and try again. Millennials and Gen Z excel in adaptability and creative problem-solving, partly because they were molded by games that rewarded experimentation.
What if each generation holds a lesson the other could level up from?
For example, consider how AI is rapidly changing the labor market. AI doesn’t care how long you’ve worked somewhere. It doesn’t honor tenure. It doesn’t reward comfort. It rewards efficiency. And that means the labor market is about to feel more like a high-stakes video game than a stable board game.
To hedge the risk of job displacement in the AI era, people need multiple skill sets. People need Gen X's ability to build foundational mastery — deep expertise, trusted relationships, reputational capital. These are not easily automated. They take time and a lot of perseverance to build. But people also need to preserve a healthy dose of the Millennial mindset. If your industry or job suddenly shifts in another direction, you can’t freeze. You must respawn. You must retool.
You can think of your career like actively managing a portfolio. The sweet spot for 'career alpha' is durable expertise combined with adaptive execution. In investing, we hedge risk by diversifying assets. In life, we hedge risk by diversifying traits. Build depth like it’s 1988. Adapt like it’s 2026. And never forget that Super Mario Brothers is still the best video game ever invented : )
This material is not intended to be relied upon as a forecast, research or investment advice. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and non-proprietary sources deemed by Silverlight Asset Management LLC to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Silverlight Asset Management LLC, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this post is at the sole discretion of the reader.