/ March 02 / Weekly Preview
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Monday:
ISM Manufacturing PMI (51.8 exp.)
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Tuesday:
N/A
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Wednesday:
ADP Employment Change (45K exp.)
ISM Services PMI (54 exp.)
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Thursday:
Initial Jobless Claims (216K exp.)
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Friday:
Non Farm Payrolls (60K exp.)
Retail Sales MoM (-0.2% exp.)
Unemployment Rate (4.3% exp.)
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Monday:
MongoDB, Inc.
Norwegian Cruise Line Holdings Ltd.
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Tuesday:
CrowdStrike Holdings, Inc.
Ross Stores, Inc.
AutoZone, Inc.
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Wednesday:
Broadcom Inc.
Veeva Systems Inc.
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Thursday:
Costco Wholesale Corporation
Alibaba Group Holding Limited
Marvell Technology, Inc.
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Friday:
Embraer S.A.
Going Nowhere Fast
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At the index level, the market is stuck in a somewhat narrow trading range. Last week, we’ve seen volatility engulf the Tech sector again, after Anthropic’s expanded AI capabilities and a Citrini Research article caused a sell-off in cybersecurity, software and financial stocks. IBM suffered its worst session since 2020. Financials fell more than -3%, as majors such as American Express, Goldman Sachs, and Blackstone were pressured due to concerns AI could automate away their businesses. From a macro perspective, bears gained a new doom scenario where unemployment reaches 10%, as workers become permanently displaced due to AI and middle-class discretionary spending completely vanishes.
A mid-week announcement by Twitter founder Jack Dorsey laying off 40% of Block’s workforce did not help animal spirits and emboldened the “AI kills everything” news cycle.
In our humble opinion, this gloomy narrative ignores real-world facts. Companies are much more likely to integrate AI and not simply be made obsolete by it. McKinsey (2025) and Netguru (Q1 2026) show rapid enterprise AI adoption: McKinsey found 88% of firms use AI in at least one function (up from 78% a year earlier), and Netguru reported 78% of U.S. corporations scaling AI enterprise-wide by early 2026.
Salesforce’s Q4 2026 results reinforce incumbent-led adoption: over 22,000 Agentforce deals closed and combined AI + Data Cloud ARR jumped to $1.8 billion (from $1.4 billion three months earlier), indicating buyers are purchasing AI from established vendors rather than being displaced by them.
This evidence points to augmentation and productivity gains. Deloitte’s 2026 report finds two-thirds of organizations reporting efficiency improvements; a Harvard study observed consultants using AI completed tasks 25% faster with 40% higher quality. Goldman Sachs Research argues these gains could boost global GDP by roughly 7% (~$7 trillion) and predicts the next AI investment phase will favor “productivity beneficiaries”— non-tech firms that deploy AI to expand margins — sometimes at the expense of the labour component.
BLS data already shows real output rising 5.4% while hours worked grew just 0.5%, and that only 5.7% of U.S. job hours currently involve generative AI, meaning the largest productivity gains are still ahead. Employment remains stable at the moment, with the cumulative number of Initial Claims, as well as Continuing Claims ticking lower.
The SaaS panic of this year resembles other Tech related fears of the past. Mechanized looms threatened textile workers in the 1800s. Automobiles displaced carriages and an entire economy related to animal power (blacksmiths, stable workers, farriers, harness makers). Widespread adoption of electric lights killed jobs like lamplighters. History is full of such examples.
Today, the bearish case rests on a secular headwind threatening all white collar jobs, with no obvious alternative to replace said jobs. Software sold off as if anyone can vibe code anything overnight. As a software company ourselves, working with AI first hand, we can attest that this is far from the truth.
Furthermore, the bearish argument overlooks the demand side of the equation. Let’s assume that software development costs plummet — wouldn’t demand pick up to compensate, now that anyone can build an app? Same in any other industry. At the end of the day, successful companies always adapt in order to capture outsized value. Those that do not or cannot adapt were already failing for other reasons.
Which brings us to probably the most important company in the news cycle — NVIDIA. The semiconductor giant reported fiscal Q4 revenue of $68.1 billion, 3.3% above the $65.9 billion consensus. Q1 guidance of $78 billion well exceeded the $72.8 billion estimate. Data center revenue reached $62.3 billion, up 75% year-over-year. Despite the beat and strong guidance, the stock fell -5% as investors expressed concern over a lack of clarity about ongoing China-related risks. While the stock is technically consolidating and essentially flat since August ‘25, NVDA’s valuation has contracted to a very reasonable 12.2x multiple.
While the S&P trades near 22x earnings, Nvidia’s forward PE is 17x. The extreme rotation now occurring in Energy, Materials and Industrials (especially with the ongoing geopolitical tensions) has left positioning extremely tilted against Technology.
The market closed Friday below the M-Trend pivot level at $691, and remains technically under pressure especially as the fallout from the war in Iran takes its toll. Equities have traded sideways since October and the index now sits below both the 20 and the 50-DMAs, which crossed bearishly.
Every rally attempt has stalled at the $695 - $700 zone. All pullbacks found buyers near $680. At the moment, the market is neither overbought nor oversold, with the medium-term Stochastic indicator at 47/100. Support lies at $652 (S1), with immediate resistance at $691.
Overall, the primary trend remains bullish, at 22% CAGR, but it’s hard to realistically maintain this level of consistent gains. The “easy money” phase appears complete. With GEX thoroughly negative, deteriorating technicals in the short term might draw more selling if the recent consolidation range gets broken.
Heading into March, seasonality should manifest in a positive way, with most of the previous years registering strong advances by the end of Q1. Since 1964, the S&P 500 has posted an average price return of approximately +1.1% during March.
March is also within the favorable “best 6 months” of the year (November - April period), historically outperforming the May - October stretch.
However, 2026 is a midterm election year, which carries increased risk of volatility during the first half. When a new president takes office, as is arguably the case now, the average midterm-year return drops to approximately ~7%.
The chart above also shows that years when the market’s YTD returns failed to reach at least +2.6% by this point in time eventually saw returns turn negative by the end of Q1.
During the week, investors will contend with the spiking price of oil and assess the duration and severity of the middle east conflict.
Wednesday is the ADP Employment Report and ISM Services PMI.
CrowdStrike (CRWD) reports after the close on Tuesday, Broadcom (AVGO) on Wednesday and Marvell Technology (MRVL) on Thursday after the bell.
On Friday, February's Employment Situation (Nonfarm Payrolls) concludes the week and will influence sentiment into mid‑March. The wage growth figure — average hourly earnings — is the key metric; an acceleration could delay expectations for rate cuts and pressure rate‑sensitive sectors.
We are closely watching for a market topping signal, as breadth has the possibility to deteriorate and trigger a SELL warning.
Notably, despite the benchmark index hovering at around the same value for the past 3 months, the Nasdaq has underperformed radically. The 2 year relative to SPY Z-Score is now at -0.75, while Utilities, Consumer Staples and Healthcare led the way higher. To put it simply, when investors rotate into defensive sectors and away from high-growth companies and Tech, it is typically a signal of capital seeking shelter.
Many times, such a low reading indicated the onset of more pronounced drawdowns as can be seen below.
Our Trading Strategy (Sigma Portfolio)
We are already well diversified with our portfolio holdings and see no reason to trade for now. The prospect of turning more defensive certainly looms, but tomorrow’s rebalancing of the Enterprise strategy holds the key to our general asset allocation.
While headlines certainly look and sound scary, we’ve been able to successfully navigate the start of the year using stock picks from our Millennium Alpha and Vision models. These models have the benefit of generating substantial alpha even in flat markets, as the portfolio picks tend to be structured from fundamental winners, and not only momentum based stock picks.
We’ll certainly keep you in the loop via Trade Alerts if any changes do happen.
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