Software (IGV) Down 35% from Highs, LFG Daily - February 24, 2026

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Luke Lloyd, CEO Lloyd Financial Group

With some more market volatility to start the week, I’m leaving today’s newsletter to the investment team!

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Colin Symons, CIO Lloyd Financial Group

There’s been a flurry of activity to start the year, and a lot of narrative to go with it. We hear a lot about how AI is going to wipe out white collar jobs and you want to own atoms over bits now. Maybe, but I’d point out that trade has already been going on for quite a while now.

There are a lot of ways to look at this idea, but let’s just look at the ratio of tech to materials, or XLK/XLB, which is pictured below. As you can see, this has been going on since late October. That doesn’t mean the action can’t continue, but I push back strenuously against the idea this is some idea where you’d be getting in on the ground floor.

Instead, I’d call it a powerful move that may have already played out. I just think it’s irresponsible to try to get people to chase something that’s already had such a move. Yes, maybe that does continue, momentum can be powerful and push extremes to further extremes.

For my part, we were buying things like DOW much closer to the beginning of the move. The reasoning was that the market was assuming no recovery in their fundamentals and didn’t care about managements’ efforts to assure the company would stay out of trouble. Are we really supposed to believe buying it now, 24% off the lows, is a better idea?

I don’t dislike cyclicals, here, I just like to buy ideas that should work in the given conditions while others hate it. For instance, buying DOW when nobody wanted it. Along that line, I’d note the XLK/XLB ratio got oversold in early February. People have already been running hard out of bits and into atoms. That idea already happened. Pretending it’s a new idea isn’t going to help anyone make money.

Right now, everyone has been running scared from tech while it’s still the source of the highest earnings growth. Some sections of tech probably needed re-rated. That’s why I was trimming things like MSFT in late July, before the trouble hit. Those concerns have already been realized.

Looking forward, I think now is actually a better time to buy bits over atoms, though I don’t particularly hate either side. I just think opportunities are better on the tech side after all this mess. Obviously, Nvidia (NVDA) earnings Wednesday night will be a big deal, but the market is strongly hedged into the event while NVDA is both less owned than in past quarters and the options market is showing less concern. Obviously, anything can happen, but I’d rather buy tech, right now.

December Factory Orders were weak, at -0.7% m/m vs. exp. -0.5% but Core Orders were 0.4% on strong New Orders.

Chicago Fed National Activity index was 0.18 vs. prev. -0.21, with Production and income improving a good deal.

Dallas Fed Manufacturing was 0.2 vs. prev. -1.2 with Capacity Utilization and Wages improving.

Trump has his State of the Union address tonight, where he is expected to talk about the economy and lowering prices. We’re also back to getting 5,000 Fed speeches and ADP Employment Change.

What does it all mean? Volatility remains bid.

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