📊 Score Steady at 5.17 — Neutral With 70% Cash as February Implodes
The Edge Of Markets score sits at 5.17 — Neutral territory (30% QQQ / 70% Cash). It's been glued to the 5.15-5.18 range for the entire past week, bouncing between those levels like a pinball that refuses to commit. A brief tick up to 5.18 on Friday morning, then right back to 5.17 by Sunday.
Here's what matters: while the score was doing its best impression of a flatline, the market was getting destroyed. The Dow shed over 500 points Friday, QQQ dropped to $607.29 — now sitting $6.60 below the 70-day EMA of $613.89. No EMA override. We follow the score directly.
Final Recommendation: 30% QQQ / 70% Cash
The score didn't flinch all week. It didn't need to. 70% cash was the right call before PPI, before PCE, and before the tariff escalation. Sometimes the best move is not moving.
🔥 PCE Confirms the PPI Nightmare: Inflation Isn't Dying, It's Mutating
We flagged PPI's gut punch on Friday — core PPI at 0.8% vs. 0.3% expected. Then the PCE data dropped and confirmed everyone's worst fear: core PCE rose 0.4% month-over-month vs. 0.3% expected, pushing the annual rate to 3.0%. That's not a "sticky" reading — that's inflation actively reaccelerating.
But the real horror show was hiding in the details. "Supercore" inflation — services excluding energy and housing — surged 0.6% in January, the largest monthly gain in nearly a year. This is the metric the Fed obsesses over because it captures wage-driven price pressures that monetary policy struggles to tame.
The "glide path to 2%" narrative that kept bulls confident through late 2025? It's dead. The market priced in a series of rate cuts through 2026. Now June is a coin flip and the 10-year Treasury is spiking in response.
- Core PCE MoM: 0.4% vs. 0.3% expected
- Core PCE YoY: 3.0% vs. 2.9% expected
- Supercore: +0.6% — worst in nearly a year
⚖️ Tariff Whiplash: Supreme Court Says No, Trump Says Watch Me
The Supreme Court handed Trump a 6-3 loss, ruling his IEEPA emergency tariffs unconstitutional — the power to tax lies with Congress, not the president. Over $133 billion had been collected under those tariffs. Over 1,000 lawsuits have already been filed demanding refunds.
Markets initially rallied on the ruling (the S&P popped 0.69% on Feb 20). For about 48 hours, the world thought maybe the tariff era was over.
Then Trump did what Trump does: he signed a new executive order imposing a 10% global tariff under Section 122 of the Trade Act of 1974 — a completely different law. When that wasn't enough, he raised it to 15% "effective immediately" over the weekend, calling the Supreme Court ruling "ridiculous" and "anti-American."
The catch? Section 122 tariffs expire in 150 days unless Congress votes to extend them. So we've traded permanent emergency tariffs for temporary legal tariffs with a ticking clock. Markets don't love uncertainty, and this is uncertainty with a capital U.
The Yale Budget Lab estimates tariffs will cost -0.4% GDP in 2026, raise unemployment by 0.6 percentage points, and increase consumer prices by 1.2%. Goldman sees consumers eating 70% of the cost. So now we have hot inflation data AND new tariffs feeding more inflation. Cool.
📉 February's Final Scorecard: A Month to Forget
Let's take stock of the damage. February started with the S&P near records and ended with it gasping for air:
- Nvidia: Posted the best quarter in chip history ($68.1B revenue, +73% YoY) and dropped 10% over two days. Because apparently beating every estimate and guiding above consensus isn't enough anymore.
- AI Scare Trade: IBM cratered 13% on Claude Code fears. CrowdStrike lost nearly 10%. Microsoft dropped 3%. The market is starting to price in that AI creates losers, not just winners.
- Inflation Data: PPI doubled estimates. PCE confirmed it. Supercore surged. Rate cut dreams are fading fast.
- Tariffs: Supreme Court struck them down. Trump brought them back bigger. 15% global tariff now in effect.
QQQ lost the 70 EMA on Wednesday after a one-day reclaim and never looked back. The Dow's worst day saw an 821-point plunge. February closed with all three major indexes in the red for the month.
🎯 The Week Ahead: Jobs Data Gauntlet Before the March FOMC
March 2-6 might be the most consequential data week of 2026 so far. Everything feeds into the March 18-19 FOMC meeting, and after that PCE print, the Fed is watching every data point with a magnifying glass.
- Monday: ISM Manufacturing PMI — previous 52.6, forecast ~51.2. If manufacturing is rolling over while inflation is heating up, that's the stagflation word nobody wants to say.
- Wednesday: ADP Employment + ISM Services + Fed Beige Book — three heavy hitters in one day. Services above 53 means the economy is hanging on. ADP sets the tone for Friday's main event.
- Thursday: Weekly Jobless Claims + Productivity — watch for any cracks in the labor market.
- Friday: Nonfarm Payrolls — consensus is 58K vs. January's 130K. If that prints anywhere close to consensus, it marks the sharpest one-month deceleration since 2020. Retail Sales data drops the same day.
Here's the dilemma: strong jobs data means inflation stays sticky and rate cuts get pushed further out. Weak jobs data means the economy is cracking under the weight of tariffs and tight policy. There's no "good" number right now — just "less bad" options.
⚠️ Bottom Line: 70% Cash Is Not Exciting, But It's Working
The score at 5.17 with 70% cash isn't going to make anyone feel like a hero. It's not a bold call. It doesn't generate stories about 10x leveraged trades. But while the market was busy losing money on hot inflation prints, tariff whiplash, and the Nvidia paradox of "record earnings but the stock still drops 10%," the model was sitting there with most of your capital parked safely.
QQQ is $6.60 below the 70 EMA and falling. Inflation is reaccelerating. New tariffs are piling on inflationary pressure. And Friday brings a payrolls number that could confirm the economy is finally slowing — right when the Fed can't cut rates because inflation won't cooperate.
That's not a dip-buying environment. That's a "keep your powder dry and wait for clarity" environment. And that's exactly what the score is saying.
The biggest week of the year is about to start. 70% cash means you get to watch from a position of strength instead of sweating every tick. Sometimes boring is brilliant.