Support Holds…For Now
RLT Newsletter 2/19/2026
The key supports we are watching have held firm so far. SPY respected the 100-day SMA, QQQ defended the February 5th low (despite a wick below it on Tuesday), RSP stayed above $200, and DIA held the $491 zone. As long as these levels continue to act as support, there’s little reason to anticipate an immediate, more aggressive downside move.
That changes if any of these levels break decisively and aren’t reclaimed the very next session. That’s when the alarm bells ring and the odds of a deeper drawdown rise meaningfully.
Don’t get me wrong, the bigger-picture setup still favors a larger correction before any new sustained bull trend can take hold. The open question is whether we squeeze out one final push to fresh all-time highs first.
SPY Daily Chart
In range-bound or corrective environments, the best risk-reward setups often come from buying right at or near the critical support. You get immediate feedback if your bullish thesis is wrong (quick stop-out), while the upside potential is outsized because you’re entering near your stop.
That’s exactly why I added bullish exposure to QQQ on Tuesday and again at Wednesday’s open. SPY was holding the 100-day SMA after a sharp multi-day selloff, and we’ve seen large bearish candles repeatedly mark short-term lows since October. History could be rhyming once again.
On QQQ, we also printed a clear bullish RSI divergence: higher low in RSI while price carved a lower low. That’s a textbook sign that downside momentum is fading, at least temporarily.
QQQ Daily Chart
Even if a broader correction lies ahead, bullish opportunities can still emerge within it. Sharp B-wave rallies inside larger downtrends can deliver substantial percentage gains and create excellent tactical long trades. Meanwhile, certain individual names will show true resilience, offering outsized relative strength setups.
One chart that fits the B-wave bounce profile right now is MSFT, one I’ve been actively covering and trading. After a 113-day A-wave decline of roughly 30%, we’re probabilistically closer to the end of that move than the beginning. A B-wave retracement could target the 100-week SMA or push back toward resistance near $467, delivering strong risk-reward from current levels (and even better if we see one more flush lower first).
MSFT Daily Chart
The key question I’m wrestling with on MSFT: does it print one final new low into the $383 to $375 zone? That would complete the wave structure cleanly and align perfectly with the 200-week SMA, a monster support level that’s held since the 2013 lows.
I’m already long MSFT with a collar in place (locking in a small gain, as we discussed last week). If we get that new low into my ideal next buy zone, ideally accompanied by bullish RSI divergence at the tail end of a steep, extended decline in one of tech/AI’s true juggernauts, it’s a trade I have to take.
Bottom Line
Support has held, but I still view any near-term bounce as likely short-lived, probably weeks to a couple of months at most, before technical patterns and seasonal pressures overwhelm and deliver the first meaningful correction in over a year.
Within that framework, plenty of tradable edges remain: find charts primed for imminent bounces like MSFT, prepare to short breakdowns of key support like DIA, and zero in on names exhibiting genuine relative strength amid broader weakness like JNJ and CAT.
Stay nimble during this chop, respect the key levels, and don’t forget that our number one job as traders is to manage the downside.