Market Insights: Tuesday, February 17th, 2026

Market Overview
US stocks edged higher Tuesday in volatile trading following the Presidents’ Day holiday, as Wall Street continued to assess lingering AI-driven anxiety that has weighed on markets in recent weeks. The tech-heavy Nasdaq Composite flipped between gains and losses before closing up 0.14%, while the S&P 500 rose 0.15% and the Dow Jones Industrial Average gained 0.07%. The session marked a modest recovery attempt after early weakness, but conviction remained limited as investors balanced optimism around select earnings and innovation themes against broader disruption fears.

Apple provided the day’s primary leadership catalyst, with shares jumping more than 3% on optimism that the company is accelerating development of wearable devices incorporating AI capabilities. Reports suggest Apple is expanding efforts around AI-enabled glasses, a pendant device, and next-generation AirPods, fueling renewed enthusiasm that hardware innovation may offset broader industry concerns. Financial stocks also saw relative strength, while several software names continued to slide amid fears that AI could compress margins and disrupt legacy business models across multiple industries.

AI jitters remain a central theme. Investors are actively scanning for the next potential victim of disruption, with prior waves of selling having already hit wealth management, logistics, transportation, and real estate-related names. The Dow and S&P 500 have now fallen in four of the past five weeks amid that pressure, underscoring the cumulative effect of persistent uncertainty. While Tuesday’s session ended modestly higher, intraday volatility reflected hesitation rather than renewed bullish conviction.

Earnings season is entering its final stretch, with Walmart’s quarterly report on Thursday standing out as the week’s marquee event, particularly as the retail giant recently joined the trillion-dollar market capitalization club. Elsewhere in corporate headlines, Paramount Skydance rose more than 5% after Warner Bros. Discovery reportedly gave the studio one week to improve its acquisition offer following rejection of a prior bid. The mixed tone across sectors reinforced that markets remain headline-sensitive and rotational rather than decisively directional.

SPY Performance
SPY opened at $680.14 and quickly tested the lower end of its range, dipping to an intraday low of $675.78 where support once again held. Buyers gradually stepped in through late morning and early afternoon, pushing price to a high of $684.94 before a mild fade into the close. SPY finished at $682.76, up 0.15% on the day, with trading volume of 76.62 million shares, slightly above average. The ETF remains locked in the broader $675 to $685 range that has defined much of the past several weeks, with bulls unable to reclaim $685 on a closing basis.

Major Indices Performance
The Nasdaq gained 0.14%, the Dow rose 0.07%, and the Russell 2000 added 0.03%. The muted gains across all major averages reflect stabilization rather than breakout strength, with leadership concentrated in select large-cap names rather than broad-based participation.

Notable Stock Movements
It was a split session across the Magnificent Seven, with roughly half finishing lower and half higher. Tesla led declines, falling as much as 1.60%, while Apple led gains, rising up to 3.18%. The mixed performance suggests rotation within leadership rather than a synchronized risk-off move. Sustained weakness across both megacap technology and crypto would be required to confirm a deeper market pullback.

Commodity and Cryptocurrency Updates
Crude oil declined 0.89% to $62.19. Our model has been forecasting crude moving toward $60 for several months and while it is possible crude continues lower, if black gold holds above $56, a rally back toward $70 remains plausible. Gold fell 3.02% to $4,893, marking a sharp pullback after recent volatility. Bitcoin declined 1.72% to close above $67,600, remaining within striking distance of the $70,000 level but still lacking upside momentum.

Treasury Yield Information
The 10-year Treasury yield rose 0.17% to close near 4.059%. In our framework, yields above 4.5% begin to pressure equities, above 4.8% typically precede sharper selloffs, and moves above 5% signal significant equity risk. Current levels remain below key stress thresholds.

Previous Day’s Forecast Analysis
Friday’s framework warned that the market had rotated back into the $675 to $685 range, allowing bears to remain engaged and emphasizing that reclaiming $685 was necessary for bulls to regain near-term control.

Market Performance vs. Forecast
Tuesday’s action aligned with that outlook. SPY tested last week’s lows near $676, held support once again, and pushed toward resistance but failed to close above $685, reinforcing the persistence of the range and the ongoing tug-of-war between bulls and bears.

Premarket Analysis Summary
In Tuesday’s premarket notes published at 7:18 AM, SPY was trading at $680.15 with upside targets at $683, $686, and $688.25, and downside levels at $680, $677, and $675. The expectation was for an initial recovery attempt toward $683 with potential weakness below that bias level.

Validation of the Analysis
The session validated that roadmap. SPY initially struggled but held lower support, advanced toward $683 and beyond, briefly testing near $685 before fading. Rejections near upper targets and defense at lower levels produced a classic range-bound day consistent with expectations.

Looking Ahead
Wednesday brings FOMC Minutes, followed by Unemployment Claims Thursday and GDP, PCE, and PMI on Friday. These releases may provide the external catalyst needed to break the current range.

Market Sentiment and Key Levels
Sentiment remains range-bound with a slight bearish tilt below $685. Resistance sits at $686, $689, $691, and $694, while support rests at $682, $679, $678, and $676. Reclaiming $685 is required for bulls to regain near-term control.

Expected Price Action
SPY’s projected maximum range for Wednesday is $675 to $691, with the Put side dominating in a narrowing band that suggests choppy price action with intermittent trending periods. No major economic news is due tomorrow beyond FOMC Minutes.

Trading Strategy
We favor shorting rallies into $689 and failed breakouts above that level, while dip buying is best reserved for failed breakdown setups at $678 and $676. Remain flexible, trade what is confirmed, and avoid forcing positions in a range-bound environment.

Model’s Projected Range
SPY’s projected maximum range for Wednesday is $675 to $691, with the Put side dominating in a narrowing range that suggests choppy price action with intermittent trending periods. There is no economic news due out tomorrow. SPY dipped on the shortened Monday trading session and came into the day down slightly, but by the end of the session reversed course to close up 0.16% at $682.85, slightly above Friday’s close but nothing significant. SPY tested last week’s lows at $676 which held again as price continues to trade in a wide $675 to $685 range similar to what we saw a few months ago. The market is likely to remain in this range, allowing the bears to stay in the game until an external catalyst breaks it. Wednesday is likely to deliver similar action as today, possibly even more muted with less trending and more sideways price movement. With SPY below $685, the bulls have the slight edge, and do not regain control until $685 is reclaimed. The long-term bull trend remains intact above $640, but new highs are off the table for Wednesday without an external catalyst. February continues to prove difficult for longs as we warned for several weeks, although sharp selloffs are often buying opportunities for a spring and summer rally. As long as price holds above key structural levels, this remains a broader dip-buying environment, but swing and intraday traders must stay focused on positioning and dealer flows which remain skewed short. Overnight the bulls need to hold above $682 to set up a push back above $685 to regain near-term control, although even a reclaim does not signal an all-clear as dealers are positioned for weakness up to $689. The $689 to $694 zone is likely to produce heavy chop and resistance before any clean directional move. The good news for bulls is that $676 appears heavily supported and may again serve as a temporary low. If $682 fails, the next stop is $678 where a bounce is likely, and a failure there revisits $676 and possibly $672. Absent a catalyst, resistance sits at $686, $689, $691, and $694, while support rests at $682, $679, $678, and $676. We favor shorting rallies into $689 and failed breakouts, especially above $689, while dip buying looks attractive on failed breakdown setups at $678 and $676. Crypto fell but remains within striking distance of $70K, while MAG stocks were mixed with half lower and half higher. If something more ominous is developing, sustained weakness across both leadership groups will lead a broader pullback. VIX fell 4.29% to 20.29, still signaling risk-off conditions and hovering near bearish territory. SPY closed well below the bull trend channel from the April lows with structural resistance near $692, and another day below the channel will likely force a redraw of the trend model.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the session in Bullish Trending Market State with SPY closing just above MSI support. There were no extended targets at the close with only a few sporadically both above and below price throughout the day. Overnight the MSI rescaled lower in a narrow bearish state with extended targets below. But these too stopped printing just after the open and SPY reversed from MSI support which led to the MSI rescaling higher several times in rapid succession until SPY reached that magic $685 level where once again, gains were capped and SPY fell into the close. For Wednesday the MSI is forecasting slightly higher prices, which will likely test both ends of the days’ range with mostly chop. MSI resistance is $684.61 with support at $682.41.
Key Levels and Market Movements:
Friday we stated, “if $685 is reclaimed, it is likely to remain a sell-the-rally market up to $689,” and added, “Below $689, sell all rallies and be cautious buying dips until $675 is reached,” while also noting, “Tuesday is likely to see trending price action with a downside push toward $675.” With the MSI opening in a Ranging Market State, patience was required until the MSI rescaled and SPY chose direction. That direction became clear just before 9:45 with a short from MSI resistance to MSI support and lower as the MSI rescaled bearish. Taking profits on the way down toward $675 aligned perfectly with the plan. A textbook failed breakdown at $676 without extended targets below signaled the short was complete and a long off the lows was the correct reversal. That long paid well as the MSI rescaled higher multiple times with intermittent extended targets. By noon the move was largely complete and SPY chopped in a tight range as the MSI returned to a ranging state. Calling it a day by noon was the disciplined choice, even though later the MSI produced two additional setups including a clean long and a short from the highs. At minimum it was a two-for-two session for traders following the framework. It was an easy day to read and execute with substantial setups, all identified through proper context, patience, and flexibility while leveraging the MSI, premarket levels, and market structure rather than forcing trades. The MSI continues to prove its reliability as the cornerstone of our trading process.
Trading Strategy Based on MSI:
Wednesday has only FOMC Minutes which could move the needle although not wildly. The market is likely waiting on OPEX and PCE on Friday to introduce more volatility. Of course with the US in talks with Iran, anything can happen so traders should be prepared to trade what they see. Overnight the bulls want to hold $682 for a push above $685 on Wednesday. The bears want to see SPY break $676 to get excited about lower prices. Both are likely to fail. Even if $685 is reclaimed, it is likely to remain a sell-the-rally market up to $688, as there is a fairly heavy wall of resistance above that level. Below $688, sell all rallies. At the same time, dips to $675/$676 look favorable as well. A range bound market is likely what will present tomorrow, absent an external catalyst. If $685 is reclaimed, $688 is the likely peak where we expect bears to contain price once again. The long-term bull trend remains intact above $640 and failed breakouts and failed breakdowns continue to offer the highest-probability setups. Remain flexible, avoid trading during Ranging Market States, and ensure all trades are fully aligned with MSI signals. Providing real-time insights into market control, momentum shifts, and actionable levels, the MSI when integrated with our Pre-Market and Post-Market Reports continues to sharpen execution precision and elevate trade quality. If you haven’t yet integrated MSI and our model levels into your process, now is the time. Contact your representative to get started as these tools are designed to support consistency and enhance performance.

Dealer Positioning Analysis

Dealers are selling SPY $685 to $715 and higher strike Calls while buying $682 to $684 Calls indicating the Dealers’ desire to participate in any relief rally on Tuesday. The ceiling for Tuesday appears to be $687. To the downside, Dealers are buying $681 to $600 and lower strike Puts in a 3:1 ratio to the Calls they’re selling/buying displaying some concern that prices could move lower. Dealer positioning is unchanged from neutral/slightly bearish to neutral/slightly bearish.
Looking Ahead to Next Friday:
Dealers are selling SPY $696 to $715 and higher strike Calls while buying $682 to $695 Calls indicating the Dealers’ desire to participate in any rally next week. The ceiling for the week appears to be $700. To the downside, Dealers are buying $681 to $575 and lower strike Puts in a 6:1 ratio to the Calls they’re selling/buying, reflecting a market that is concerned about lower prices. For the week Dealer positioning is unchanged from bearish to bearish. We advise reviewing Dealer positioning daily for directional clues. These positions evolve quickly and tracking them is essential for staying ahead of shifting market sentiment.

Recommendation for Traders
Into Wednesday, respect the range and the bearish tilt below $685. Favor selling failed bounces and remain selective with dip buying until structural support clearly confirms. Monitor dealer positioning daily and allow MSI signals and market structure to guide execution.

Good luck and good trading!