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1. Market Overview and Sentiment
Major U.S. stock indices have experienced volatility with a recent trend towards weekly losses, driven largely by concerns over the disruptive potential of artificial intelligence (AI) across sectors. The S&P 500 Equal Weight index reached an all-time high, but broader indices faced selling pressure. Investor sentiment is cautious, with a "sell first, ask questions later" mentality regarding AI developments.
Economic indicators remain generally strong, with significant payroll gains and cooler-than-expected inflation data contributing to a decline in Treasury yields. However, technical indicators, especially for the Nasdaq Composite and Nasdaq 100, suggest near-term downside risks. The market outlook is moderately bearish for the upcoming week.
Cryptocurrency markets have stabilized somewhat, with Bitcoin finding support near its 200-week moving average, though concerns about quantum computing risks persist.
Upcoming key economic reports include Empire State Manufacturing, Building Permits, Capacity Utilization, Housing Starts, Initial Claims, Pending Home Sales, and Q4 GDP advanced readings scheduled between February 16 and 20, 2026.
Source: HEDGTRADE_INSIGHTS
2. AI and Technology Sector Impact
AI developments have unsettled investors, with new AI tools launched in wealth management and insurance sectors. Companies like Altruist and Insurify introduced AI-enabled tax planning and insurance comparison tools, respectively. This has led to increased volatility in software stocks, despite strong performances from hardware and semiconductor companies such as NVIDIA and Apple.
Warren Buffett's Berkshire Hathaway notably reduced its Amazon stake by over 75% in Q4 2025, signaling a strategic shift away from certain tech holdings amid market uncertainties.
Apple (AAPL) remains a key player, benefiting from strong brand loyalty and innovation, with shares rising ahead of new product launches despite broader market uncertainties.
Macroeconomic Environment and Monetary Policy
The Federal Open Market Committee (FOMC) minutes reveal a hawkish stance, with officials emphasizing the need for clear evidence of sustained inflation reduction before considering rate cuts. Some members are open to further tightening if inflation persists. This contrasts with political pressures advocating for easing, underscoring tensions between the Fed and government.
Market participants are closely watching upcoming US economic data releases, including inflation metrics (PCE Price Index), GDP figures, and employment reports, which will influence expectations for future Fed policy. The US dollar remains strong, supported by safe-haven demand amid geopolitical tensions and reduced expectations for imminent rate cuts.
In the UK, economic pressures are mounting with rising unemployment, slowing wage growth, and weak industrial production. The Bank of England shows signs of division, with some members favoring rate cuts amid stagflation risks. The British pound has lost momentum but remains resilient despite these challenges.
Japan's inflation rate has eased to 1.5%, meeting central bank targets, while Australia’s strong employment data has bolstered the AUD and raised expectations for a potential rate hike.
Equities and Market Sentiment
US and European equity markets have experienced mild corrections driven by interest rate concerns and geopolitical tensions, particularly involving Iran. Asian markets, notably Japan and Singapore, have shown gains.
The S&P 500 Equal Weight index outperforms the cap-weighted index, indicating broader market participation beyond mega-cap tech stocks. However, the "Magnificent Seven" tech giants face skepticism over AI investment returns, with software companies under pressure due to disruption risks.
Technical indicators suggest cautious near-term outlooks for major indices like Nasdaq 100 and S&P 500, with key support and resistance levels being closely monitored. The Dow Jones maintains a bullish bias above key moving averages.
Fixed Income and Volatility
US Treasuries have found support despite strong economic data, reflecting a defensive stance amid uncertainty. The VIX volatility index has risen above 20, signaling increased market nervousness as investors digest mixed macroeconomic signals and geopolitical risks.
Currency Markets
The US dollar is at a critical juncture, showing strength but facing bearish sentiment at multi-year highs. EUR/USD is testing key support levels near 1.165, with recent European PMI data providing some uplift. GBP/USD has retreated from recent highs amid UK economic weakness and monetary policy uncertainty.
JPY bulls face pressure due to rising US yields and risk sentiment, though support levels may offer a rebound opportunity. The AUD/NZD pair is strong, driven by robust Australian employment figures and expectations of future rate hikes.
Commodities and Safe-Haven Assets
Geopolitical tensions in the Middle East, especially between the US and Iran, have heightened risk-off sentiment, boosting demand for safe-haven assets like gold and silver. Gold prices have surpassed $5,000 per ounce, supported by ongoing macroeconomic uncertainties, central bank purchases, and geopolitical risks.
Technical analysis shows gold in a consolidation phase with key resistance near $5,400 and support around $4,677. Despite short-term volatility, the long-term bullish trend remains intact, with potential upside if gold breaks above critical levels.
Silver and other precious metals also benefit from supply deficits and industrial demand. Crude oil prices have surged above $65 per barrel due to supply disruption fears, with resistance levels at $66.80 and potential targets up to $74, reflecting strong geopolitical risk premiums.
Cryptocurrency Market
Cryptocurrencies like Bitcoin and Ethereum show signs of stabilization but face pressure from risk-off flows and geopolitical uncertainty. XRP has declined amid hawkish Fed minutes, ETF outflows, and geopolitical tensions, with institutional flows remaining cautious and technical outlook bearish in the short to medium term.
The divergence between gold and Bitcoin highlights a rotation from risk-sensitive crypto assets to traditional safe havens amid rising geopolitical risks.
Outlook and Key Considerations
- Investors should monitor upcoming US inflation and GDP data, as well as central bank communications, for clues on monetary policy direction.
- Geopolitical developments, especially in the Middle East, remain a significant source of market volatility and safe-haven demand.
- Equity markets face near-term headwinds from interest rate uncertainty and AI sector disruption risks, with broader market breadth providing some resilience.
- Gold and oil prices are poised to remain elevated given ongoing geopolitical tensions and inflation concerns.
- Currency markets will continue to react to divergent economic data and central bank policies, with the USD, JPY, and AUD/NZD pairs being key focus areas.
- Cryptocurrency investors should be cautious amid risk-off sentiment and regulatory uncertainties, with XRP and Bitcoin showing contrasting dynamics.
Market Summary
On February 20, 2026, the US stock market showed mixed performance amid geopolitical tensions and economic data anticipation. Major indices declined slightly:
- S&P 500: Fell 19 points (0.3%) to 6,861
- Nasdaq 100: Dropped 101 points (0.4%) to 24,797
- Dow Jones Industrial Average: Decreased 267 points (0.5%) to 49,395
- Russell 2000: Gained 7 points (0.2%) to 2,665, showing small-cap resilience
Sector-wise, financials were the hardest hit (-0.9%), followed by consumer discretionary and technology sectors. Utilities (+1.1%) and industrials showed relative strength.
Oil prices surged to $67.01 per barrel, driven by US President Trump's ultimatum to Iran on nuclear negotiations and military deployments in the Middle East. The US dollar index rose for the fourth consecutive day, supported by strong labor market data and hawkish Federal Reserve signals.
Geopolitical and Economic Context
Heightened US-Iran tensions are a key market driver, with the US deploying two aircraft carriers to the region and setting a 10-15 day deadline for Iran to reach a nuclear deal. This has pushed oil prices to year-to-date highs and increased market volatility.
US economic data releases are closely watched today, including the Q4 2025 GDP estimate and December PCE price index. GDP growth is expected to slow to 3.0% from 4.4% in Q3, with inflation measures (PCE) steady around 2.8%-2.9%. These data will influence Federal Reserve policy expectations and market sentiment.
Key Market Instruments and Technical Insights
Equity Indices
- US30 (Dow Jones Industrial Average): Trading near 49,416 with a strong uptrend but showing signs of consolidation. Elliott Wave analysis suggests a possible corrective phase targeting 46,000-47,000.
- Nasdaq 100: Recovering from lows around 24,387 with resistance near 25,057. Bullish above recent lows but cautious of resistance levels.
- Russell 2000: Small-cap stocks showing modest gains, indicating selective strength in the market.
Commodities
- WTI Crude Oil: Surged to $67.01, testing key resistance levels amid geopolitical risks.
- Gold: Stable near $5,000, with limited movement despite market tensions.
- Silver and Agricultural Commodities: Declined due to oversupply concerns.
Forex and Bonds
- US Dollar Index (DXY): Up 0.1%, supported by strong labor data and Fed hawkishness, with resistance at 97.88 and support near 96.48.
- US Treasury Bonds:
- 5-Year Bond: Last close 109.55, technicals mostly bullish with buy signals on short-term EMAs.
- 10-Year Bond: Last close 113.08, showing mixed signals with some bearish momentum.
- 30-Year Bond: Last close 118.07, sell signal with mixed technical indicators.
Corporate and Sector Highlights
Technology stocks showed mixed results with Nvidia rising 1.7% on a major AI chip deal with Meta Platforms, boosting semiconductor sector sentiment. Amazon and Microsoft also posted gains, while Meta Platforms declined slightly.
Retail and consumer staples faced pressure, with Wal-Mart shares falling despite strong Q4 results due to cautious outlooks. Energy stocks benefited from rising oil prices, with Occidental Petroleum (OXY) and Deere & Company (DE) reporting strong earnings and raised forecasts.
Biotech and pharma sectors saw mixed reactions, with some companies reporting positive trial results and others facing legal or earnings challenges.
Market Outlook
Investors remain cautious amid geopolitical risks and await key economic data releases that will shape Federal Reserve policy expectations. The market shows signs of resilience but faces potential volatility from US-Iran tensions and inflation data surprises.
Technical indicators suggest a cautiously bullish stance on major indices, with key support and resistance levels to watch closely. Commodities and currency markets are also sensitive to geopolitical developments and economic data.
WMT (Wal-Mart)
Reported better-than-expected quarterly results but provided conservative guidance moving forward. Earnings before the open today.
DE (Deere)
Reached record highs following strong Q1 results and raised full-year net income forecast.
OXY (Occidental Petroleum)
Led the energy sector with better-than-expected EPS and raised dividend.
CVNA (Carvana)
Declined due to disappointing gross profit per unit and missed adjusted EBITDA forecast.
EBAY (eBay)
Announced acquisition of Depop from Etsy for $1.2 billion.
BTDR (Batdr)
Shares down after announcing a proposed private placement of convertible bonds.
KLAR (Klar)
Swung to a net loss for Q4 despite sales growth, shares down significantly.
POOL (Pool Corporation)
Q4 miss and lower annual profit forecast weighed on shares.
Comfort Systems
Posted a positive EPS surprise of 38.4% and sales surprise of 15.8%, with strong quarterly EPS and sales growth. Shares rose in regular and after-hours trading.
Economic Data Highlights
- Weekly jobless claims fell to 206,000, better than expected 225,000.
- Pending home sales fell 0.8% month-over-month, below estimates.
- 30-year mortgage rates fell to 6.01%, lowest since September 2022.
- Personal Consumption Expenditures (PCE) inflation expected to rise 0.3% month-over-month, with year-over-year easing to 2.8%.
- Advance estimate for Q4 GDP expected at 2.8% growth.
Geopolitical and Market Sentiment
President Trump is reportedly considering a limited air strike on Iran, raising concerns about military escalation. Oil prices surged to six-month highs before a slight overnight decline. Gold prices rose to $5,000 per ounce, silver at $80 per ounce.
Sector Movers
Gainers
- CDE +8%: Boosted by earnings and precious metals rebound.
- DASH +8%: Q4 GOV and EBITDA slightly above estimates.
- DE +6%: Strong Q1 results and raised forecast.
- EBAY +7%: Acquisition announcement.
- OXY +9%: Strong EPS from midstream unit.
Laggards
- BTDR -15%: Convertible bond placement announcement.
- CAR -19%: Missed EBITDA forecast.
- CVNA -3%: Profit disappointment.
- KLAR -23%: Net loss despite sales growth.
- POOL -12%: Earnings miss and lowered forecast.
Other Company News
- Blue Owl Capital (OWL) is selling $1.4 billion in assets amid pressures in direct lending and software stocks.
- Hims & Hers Health, Inc. acquired Eucalyptus to enhance digital health capabilities.
- Salesforce (CRM) signed agreement to acquire Momentum, a conversational insights platform.
- Airbus (EADSY) adjusted production targets for A320neo series.
Market Overview
Markets showed slight declines but remain on track for weekly gains. The S&P 500, Dow, and Nasdaq experienced minor drops. Earnings season continues with over 74% of S&P 500 companies beating expectations so far.