THE BIG IDEA
An ongoing theme in the stock market, as well as The Prime Wave, during the first two months of 2026 is the starkly different outcomes depending on which corner of the market you are poking around in.
Mostly, the sexier stocks that most of us own are out. Boring is better.
Of course, nothing is ever as simple as that. Even among similar companies with similar businesses you can still end up with bigly different results. Take a look at the YTD returns for a few pairs of well-known stocks.
Just for fun, let’s also compare companies with similar names even if they are in very different businesses.
If the main theme of 2026 has been Boring Is Better Than Sexy, then a secondary theme may be the Wall Street catchphrase that “it is a stock-picker’s market”. You can’t just decide that fast food restaurants are the place to be. You have to figure out which fast food restaurants.
How can we do that? If there was an easy or obvious answer, everyone would just do that, wouldn’t they?
A less obvious answer, which seems to be mostly true, is that investors are drifting towards the “safer” and “stronger” names. If you were going to own shares of only one fast food chain, which one would you choose? The one introducing new products or the one closing hundreds of locations?
That doesn’t fully explain the current environment. Why is a blast from the past like Intel trending higher while NVIDIA goes nowhere for half a year? Sometimes a stock can look so bad that it starts looking good. (See also, this week’s Watcher idea.)
Where will McDonald’s and Wendy’s be three years from now? Or Dell and Hewlett Packard? We have no idea. But we will watch the charts for signs of a near-term shift in the market’s attitude towards these stocks.
It seems a better way to go than just leaving it all to chance.
SEEN ON THE INTERNETS
Geopolitical developments are dominating the headlines as well as the stock market this weekend. The Prime Wave does not get into geopolitics, but the implications for the stock market is within the scope of this newsletter.
We found a good roundup of the situation on Bloomberg with an article titled Wall Street Turns to ‘Haven-First’ Strategy Amid Iran Crisis, linking here to a Yahoo Finance copy in case of any paywall issues.
A couple of the key quotes:
“This is about Hormuz risk, not retaliation. If shipping stays open, stocks can work through it. If it doesn’t, all bets are off.”
“geopolitical flare-ups typically tend to create temporary selloffs rather than sustained bear markets, so I expect equities to eventually stabilize once Middle East developments are fully digested”
It can be tempting to put some money to work during a panic selloff. It often works out. Sometimes, though, the situation gets worse before it gets better.
In the end, the comment in the article from Ed Al-Hussainy, a portfolio manager at Columbia Threadneedle Investments, sums it up best:
“The extent of the de-risking is anyone’s guess.”
NUMBERS ONLY
$67.29 | Crude oil finished Friday at a multi-month high. Surely we will see it even higher at today’s open. |
- 3.38% | The NASDAQ Composite, home to all of your favorite tech stocks, index was down 3.38% for the month of February. |
$69.04 | Altria Group, better known by its former name - Philip Morris - reached an all-time high price on Friday. Smoking is cool again! |
SWINGEX INDEX
As of market close on: 27 February 2026
Swingy says: The market is in a fog right now. Stay where you are and wait for a clearer signal.
Learn more about how the Swingex Index works here.
WATCHER
Stocks highlighted here each week are not recommendations to buy or sell. They are provided as ideas for swing traders to follow up on with their own research.
NVO (Novo Nordisk): It’s not often we take an interest in a stock that is down 37% in a month, but here we are.
Take a look at that chart! It is ugly, isn’t it? This week, we are going to make a speculative bet that it can’t get any uglier. There are some legitimate reasons to think it could be the case.
After taking that big plunge down to begin last week, the intensity of the selling gradually eased up. You see this both in the share price itself and in the trading volume. By Friday, the trading activity was around the long-term average and the decrease in the price was in line with the S&P 500.
Moreover, the RSI(2) is approaching zero. That is what you might expect for a stock that is down nine days in a row and counting. It is rare for the indicator to live down there for very long and the only way it goes up is with an increase in share price.
So that is what we are looking for: a countertrend rally even if it lasts for only a few days. A rebound to last Monday’s opening price works out to a 7% gain from here.