A Respite for Software & The Section 122 Pivot
Prospero.ai 2/24/26 Trading Letter
Market/Macro Update
For the past two weeks, the tech-heavy QQQ has been trapped in a brutal ping-pong match, violently alternating between red and green days as investors try to digest the historic policy whiplash between last week's Supreme Court tariff smackdown and the administration's immediate Section 122 pivot. Today, however, the whiplash has paused as the market braces for President Trump’s State of the Union address tonight. Investors and algorithms alike will be parsing every word to see how he addresses the ongoing battle over tariffs, inflation, and the broader "AI disruption" fears that have recently plagued the tech sector.
This cautious anticipation is sparking a very healthy broadening under the hood. Small and Mid Cap Growth are leading the way today—a refreshing sign that capital is continuing to spread out rather than hiding in just a handful of mega-caps. Still, the looming SOTU and the lingering uncertainty surrounding global trade have kept the big money firmly on the fence.
