Market Insights: Wednesday, February 18th, 2026

Market Overview
US stocks pushed higher for a third consecutive session on Wednesday as investors brushed aside lingering AI disruption fears and digested the latest Federal Reserve meeting minutes. The S&P 500 gained 0.6%, while the tech-heavy Nasdaq Composite advanced 0.8%, and the Dow Jones Industrial Average added 0.3%. The steady climb marked a notable shift in tone from last week’s volatility, with buyers showing renewed willingness to reengage in technology and growth names after a turbulent stretch that saw software stocks in particular take significant pressure.

Technology shares continued to regain composure, though the broader debate around artificial intelligence remains unresolved. While the sharp selling seen in prior sessions has eased, investors are still weighing the long-term implications of AI on business models, corporate competition, and profit margins. Questions persist around whether the massive capital expenditures tied to AI infrastructure will ultimately translate into durable earnings growth. Nonetheless, Wednesday’s session reflected improving confidence that the recent pullback may have been overextended. Amazon and Nvidia were among the leaders within the Magnificent Seven, helping power the Nasdaq higher, while energy stocks outperformed across sectors as crude oil surged nearly 5%.

The Federal Reserve’s January meeting minutes added to the constructive tone. Policymakers signaled a willingness to keep rates steady for now, though several participants noted that further rate cuts would likely be appropriate if inflation continues to decline in line with expectations. Markets are currently pricing in at least two rate cuts this year, with confidence in a potential June move largely intact following the release. The minutes did little to alter that outlook, reinforcing a balanced stance rather than a hawkish shift.

On the earnings front, DoorDash, eBay, and Analog Devices reported results, contributing to sector-level volatility but not derailing the broader advance. Overall, Wednesday’s session suggested that while AI-related concerns have not disappeared, investors are increasingly comfortable looking through near-term noise and positioning for stabilization ahead of Friday’s key economic releases.

SPY Performance
SPY opened at $683.90 and initially tested lower levels, dipping to an intraday low of $675.78 before buyers stepped in decisively. From there, price advanced steadily through midday and into the afternoon, reaching a high of $689.15 before closing at $686.05, up 0.47% on the day. Trading volume came in at 66.44 million shares, about average. The close above $685 marks a meaningful reclaim of near-term resistance and shifts short-term control back toward the bulls, though heavy resistance remains overhead near $689 to $694.

Major Indices Performance
The Nasdaq led with a 0.78% gain, followed by the Dow up 0.26% and the Russell 2000 higher by 0.36%. The broad participation across indices reflects a more balanced rally than earlier in the week, though leadership remains concentrated in select large-cap names.

Notable Stock Movements
It was an all-green session across the Magnificent Seven, led by Amazon, which rose as much as 1.81%. Nvidia also posted solid gains, reinforcing the shift back toward AI leadership after last week’s pressure. The synchronized strength across megacaps suggests stabilization rather than imminent breakdown, though sustained follow-through will be required to confirm a durable trend shift.

Commodity and Cryptocurrency Updates
Crude oil surged 4.88% to $65.30. Our model has been forecasting crude moving toward $60 for several months, and while it is possible crude continues lower longer term, holding above $56 keeps the door open for a rally toward $70. Gold gained 2.04% to $5,005, reclaiming the $5,000 level as hedging demand returned. Bitcoin fell 2.02% to close above $66,300, remaining within striking distance of $70,000 but lacking strong upside momentum.

Treasury Yield Information
The 10-year Treasury yield rose 0.84% to close near 4.086%. In our framework, yields above 4.5% begin to pressure equities, above 4.8% typically precede sharper selloffs, and above 5% signals significant equity risk. Current levels remain below key stress thresholds.

Previous Day’s Forecast Analysis
Tuesday’s framework emphasized that the market remained range-bound between $675 and $685, with reclaiming $685 necessary for bulls to regain near-term control. We also noted that resistance between $689 and $694 would likely produce heavy chop absent a catalyst.

Market Performance vs. Forecast
Wednesday’s action aligned well with that view. SPY reclaimed $685 and pushed toward $689, where gains began to stall, confirming the anticipated resistance zone. The recovery from $676 once again reinforced strong structural support at last week’s lows.

Premarket Analysis Summary
In Wednesday’s premarket notes published at 8:21 AM, SPY was trading at $685.18 with upside targets at $685.75 and $688.25, and downside levels at $684.25, $682.75, $681.25, and $678.25. The expectation favored long entries near support as long as price held above the bias level at $684.25.

Validation of the Analysis
The session validated that roadmap. SPY held above the $684.25 bias early, advanced toward $688.25, and extended slightly beyond to $689.15 before stalling. Pullbacks toward lower targets provided additional long opportunities consistent with the plan.

Looking Ahead
Thursday brings Unemployment Claims, followed by GDP, PCE, and PMI on Friday. These releases may provide the catalyst needed to break the current consolidation range and determine whether the recovery can extend.

Market Sentiment and Key Levels
Sentiment has improved with the reclaim of $685 but remains cautious. Resistance sits at $689, $691, and $694, while support rests at $684, $682, and $678. Holding above $685 strengthens the bullish case, though sustained follow-through above $689 is required to shift momentum decisively.

Expected Price Action
SPY’s projected maximum range for Thursday is $675 to $691, with choppy price action likely as markets position ahead of Friday’s economic data.

Trading Strategy
We favor buying dips that hold above $684 and shorting failed breakouts near $689 to $691. Remain flexible and avoid forcing trades in what remains a range-bound environment with heavy resistance overhead.

Model’s Projected Range
SPY’s projected maximum range for Thursday is $679 to $694, with the Call side dominating in a steady band that suggests choppy price action with intermittent trending periods. There are Unemployment Claims due out tomorrow which are unlikely to move the market. SPY gapped higher overnight continuing its recovery attempt, rising 0.50% to close at $686.29, once again above the $685 level that denotes bull control. At the open SPY attempted to close the gap but fell short, which fueled a rally after the open that saw SPY reach $689 before a selloff pushed it back to $684, but that level held and into the close SPY rallied in the final 30 minutes to finish up on the day just above bull dominance. Our model suggests SPY will continue to trade within the $675 to $685 range with breakouts and breakdowns unlikely to last more than one or two days, and today’s breakout above $685 lasted only a few hours before profit taking kicked in. However, with a close above $685 the bulls regain more than just an edge and are favored to press prices higher. The bulls still want to reach $700 before month end, which is possible but not likely without an external catalyst, and geopolitical risks remain a wildcard so traders should stay alert and trade what they see. Thursday is likely to deliver similar action as today, possibly more muted with less trending and more sideways movement. The long-term bull trend remains intact above $640, yet February continues to prove difficult for longs, and while we warned that February can be challenging, 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. Overnight the bulls want to hold $685 ideally or see a quick trap below that level that recovers quickly, and if $685 holds the bulls will attempt to push toward $690 where major resistance is expected. A failure at $685 brings $680 back into play without much support in between. Above $690 there is heavy resistance into $695 so any breakout is likely to be slow and difficult. If $680 fails there is little to prevent a move down to $675. Absent a catalyst, resistance sits at $689, $690, $694, and $695, while support rests at $685, $680, $678, and $675. We favor longs off support down to $680 and shorting rallies near $690, particularly on failed breakouts. Crypto fell again today but remains within striking distance of $70K, while every MAG stock rallied led by Amazon up over 1.8%. If something more ominous develops, sustained weakness across both leadership groups would likely lead a broader pullback. VIX fell 3.3% to 19.62, still signaling risk-off conditions but easing slightly from bearish territory. SPY closed well within a redrawn bull trend channel from the April lows with structural support near $677.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the session in Bullish Trending Market State with SPY closing just below MSI resistance. There were no extended targets at the close but for must of the morning session extended targets printed above price. The premarket too saw extended targets with the MSI rescaling higher which forecasted the day’s rally. For Thursday the MSI is forecasting slightly higher prices, which will likely test both ends of the days’ range. MSI resistance is $686.81 with support at $684.10.
Key Levels and Market Movements:
Tuesday we stated, “Overnight the bulls want to hold $682 for a push above $685,” and added, “The bears want to see SPY break $676 to get excited about lower prices. Both are likely to fail,” while also noting, “Even if $685 is reclaimed, it is likely to remain a sell-the-rally market up to $688.” With the MSI opening in a Bullish Trending Market State with extended targets printing in the premarket, buying MSI support on a textbook failed breakdown was the perfect setup, targeting MSI resistance and premarket levels up to $688 as indicated in the prior day’s market sentiment report. And sure enough at $688 the market stalled, but with extended targets still printing above, fading the high was a no-go until those targets stopped printing around 1:10 pm. At that point a short was in order, working back down the ladder to MSI resistance turned support and then to MSI support once again. To the penny these levels played out with precision, and while there was a third opportunity to buy MSI support into the close, simply taking the first two clean setups provided clear, straightforward trades that were easy to identify and execute. 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:
Thursday has little economic news so the market is likely to move more sideways than trend until Friday given OPEX and PCE, which can introduce more volatility. With the US weighing potential action against Iran, anything can happen, so traders should be ready to trade what they see. Overnight the bulls want to hold $685 and grind toward $690. The bears want $685 to fail so they can press price down to $680. Like today, both pushes are likely to fail and keep the market trapped in a wide range. Even if $685 holds, rallies toward $690 are still likely to be sold on the first test because resistance above $690 is thick. If $685 breaks, the market is likely to test $680 where dip buyers should show up. If $680 fails, $675 is next and another test there may not hold as cleanly, so be cautious buying that level without a clear failed breakdown and recovery. Absent a surprise catalyst, expect two-way trade with failed breakouts near $690 and failed breakdowns near $680 offering the highest-probability setups. 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 $687 to $715 and higher strike Calls while buying $686 Calls and selling $684 to $685 Puts, indicating the Dealers’ belief that prices will continue to rally on Thursday. Dealers do not sell ATM Puts unless they believe there is a floor in the market. The ceiling for Thursday appears to be $690. To the downside, Dealers are buying $683 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 $687 to $715 and higher strike Calls while buying $693 to $695 Calls indicating the Dealers’ desire to participate in any rally into Friday. The ceiling for the week appears to be $700. To the downside, Dealers are buying $686 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 Thursday, respect the reclaimed $685 level but remain aware of heavy resistance above. Favor buying structured dips and selling failed breakouts, and continue to rely on MSI signals and dealer flows to guide execution.

Good luck and good trading!