Deceptive Weakness

Deceptive Weakness 
Dan Russo, CMT 
February 2, 2026 

There are some weaknesses in the market—but it’s deceptive. You must know where to look, and it’s not where EVERYONE else is looking. As we discussed last week, the shifts are subtle, but they’re there. 

At the same time, February has historically been a friendly month for investors. Still, for the first time in a while, the pressure is on the bulls. It’s officially “show me” time. 

S&P 500 

The S&P 500 hit a new high last week, so it’s understandable that many investors weren’t actively hunting for signs of weakness. Admittedly, I wouldn’t normally be overly concerned with cracks beneath the surface when a major index is trading at record levels. 

Ideally, we like to see breakouts stick—but the fade that followed wasn’t particularly damaging either. The index remains well above the 60-week moving average. 

Source: Optuma 

Decliners and New Lows 

This chart makes an appearance for the second consecutive week, so regular readers should have a growing sense of what’s happening beneath the surface. The five-day moving average of decliners continues to drift higher—slowly, but unmistakably. 

At the same time, new lows are still expanding. 

Source: Optuma

Consumer Staples

This group may not be on many radars—and understandably so, given that Consumer Staples make up less than 6% of the S&P 500. Still, the sector is quietly pressing up against record highs and has outperformed the broader index year-to-date.

Notably, the relative ratio has reclaimed its 50day moving average after successfully holding the November 2025 lows. And let’s be clear—Staples are not typically known as the “offensive” players in the market.

Source: Optuma

Monthly Seasonality 

Another underappreciated fact: February is one of just two months that has posted negative average returns for the S&P 500 since 1950.

Source: Optuma

Silver and Gold 

Since everyone else is talking about it, we’ll mention it too—mainly because it’s likely why many investors have missed the more subtle weakness highlighted above. 

There’s no need to belabor the point. Gold and silver are simply correcting parabolic moves. Both are nearing their respective 50-day moving averages, which is a logical area for buyers to step back in. We shall see.  Source: Optuma 

Source: Optuma 

Final Thoughts 

The market isn’t breaking—but it is quietly changing its character. New highs at the index level mask increasing participation from defensive areas, a slow creep higher in decliners, and expanding new lows beneath the surface. None of this is decisive on its own, but together it’s enough to warrant attention. 

This is not a call to get bearish. It is a reminder that bull markets don’t run on autopilot forever. February has historically been less forgiving, and the burden of proof now sits with the bulls. 

For now, the weakness is deceptive. 

PFM-20260202 

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