The Weight of Evidence

The Weight of the Evidence 

Dan Russo, CMT 
February 17, 2026 

There is never just one thing. Those who know us well understand that in our composite model, there’s rarely a single input that gets us into the market, and rarely one that gets us out. We rely on combinations of systems to determine whether the weight of the evidence supports being invested. 

Right now, that weight remains somewhat compelling for equity bulls. However, the weight of the market itself may be getting harder to carry, especially as investors appear to have adopted a “shoot first, ask later” mindset when it comes to Artificial Intelligence. 

Source: Optuma 

NYSE Advance/Decline Line 

As the major averages consolidate, more stocks continue to move higher than lower. The NYSE Advance/Decline Line made a new high last week and remains above its rising 43‑week moving average. 

Source: Optuma 

Generally speaking, this is a bullish development. Historically, investors should expect the averages to eventually follow the individual stocks but… 

The Mag Seven 

The market’s heaviest weights are now under pressure. An equal‑weight index of the Mag Seven shows that, at a minimum, the intermediate‑term trend has shifted from up to flat. The group is trading below a now‑declining 50‑day moving average and is approaching its 200‑day moving average. 

The simple reality is this: prolonged weakness in the largest weights may become too much for the rest of the market to offset. 

Source: Optuma 

Dow Jones Transportation Average 

There’s an added wrinkle to the story. When it comes to anything even tangentially related to Artificial Intelligence, investors appear eager to shoot first and ask questions later. We’ve all seen the carnage in software stocks as fears of “vibe coding” disintermediating established SaaS leaders took hold. 

But last Thursday, that fear spread to the Transports. 

According to The Wall Street Journal, the sell‑off appeared to be sparked by a press release from a Florida‑based firm called Algorhythm Holdings, which claimed its SemiCab unit boosted customers’ freight volumes by more than 300% “without a corresponding increase in operational headcount.” 

Bloomberg added: 

“Logistics stocks plunged on Thursday as the group became the latest victim of the artificial intelligence ‘scare trade.’ At the center of the selloff: a former karaoke company with a market value of only $6 million.” 

A former karaoke company. Let that sink in. 

Investors aren’t waiting around. Their finger is clearly hovering over the sell button. 

Source: Optuma 

Consumer Staples 

All of this is unfolding as investors continue to rotate into Consumer Staples—a historically defensive corner of the equity market. The group has broken out to new highs and has turned higher on a relative basis versus the S&P 500. 

Source: Optuma 

Final Thoughts 

The weight of the evidence still leans bullish. Breadth is healthy; leadership beyond mega‑caps remains intact, and major indices continue to respect long‑term trends. But markets don’t exist in a vacuum and investor behavior matters. The real question is can the market handle the weight of weakness in its largest leaders and the weight of the A.I. mindset.  

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