The Fear & Greed Index is back in the “fear” zone, down from “greed” a month ago, and the Volatility Index (VIX) keeps edging higher. It’s not a sign of panic, but rather an uneasiness that was around before the weekend.

Squeaker

Yesterday, naturally, Energy (XLE) led the way, although most names closed below their high point of the session. Industrials (XLI) were higher on the Supply for Management (ISM) Manufacturing number, and Technology (XLK) caught some nibbles.

Equity positioning in Consumer Staples (XLP) and bringing up the rear suggest buyers are looking for offense, not defense. Many want to be in the big names when the coast is clear.

Mag Seven Gets Ready

Lots of nibbling in “Mag Seven” and mega-cap names, with Nvidia (NVDA) attracting the most after a Wall Street upgrade.

Roundhill Big Tech ETF (MAGS) is hovering just above its 200-day moving average, which could be perfect positioning.

Inflation Risk Elevated

With all the attention on Iran yesterday, most investors missed another encouraging manufacturing report. February ISM manufacturing saw expansion in the three “demand” components:

New orders, backlog, and new export orders.

But what caught my eye the most was the spike in prices. 

It's fine if there is no rate cut in the first half of the year, provided the market can rely on the manufacturing renaissance and rebound in consumer spending. Conversely, it's imperative that oil prices rise, or the conversation could shift to Federal Reserve rate hikes.

Another Hard Landing for SaaS

MongoDB, Inc. (MDB) had been crushing it with a string of strong earnings results, including yesterday after the closing bell.

But guidance came up short, and all the artificial intelligence (AI) fears drained the blood from shareholders, leveling the stock by 24%.

This could be a tough session for beleaguered Software-as-a-Service (SaaS) and software names.

There is a lot to juggle right now, and there is no denying that while vulnerable stocks and sectors look attractive, they can still take monster haircuts.

Today's Session

A litany of headlines from the Middle East is pressuring the market this morning.  Perhaps the most concerning is ships have stopped going through the Strait of Hormuz mostly because of insurance issues.  Meanwhile, Iran is threatening every ship, but each moment their ability to cause harm is being degraded.  It could take a week to ten days to completely wipe out the weapons menacing the Strait. 

China is also asking Iran to open the Strait.  Ironically, they do not fully control it but pose a threat that must be extinguished.

We’ve Been Here Before (many times)

The key "action" every investor should take right now is to assess vulnerabilities in their portfolio.

There may be stocks that you should have closed a long time ago – holding and hoping won’t change the fate of these names.

The next key action is to prepare to seize on emotionally driven selling, where fundamentals are temporarily ignored.

Remember, great stocks get cheap when there is a wave of margin calls because the best names must be sold.

There is also a paradigm shift in the best market niches to make money.

There is an old Wall Street saying: buy low, sell high.

Now is the time to lean forward in your seat and be ready to take advantage of the selling when the dust settles.

I think that will be very soon.

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