It wasn’t a runaway session, but it made a huge statement yesterday. In the face of doubts and negative speculation about the conflict in Iran, the market opened higher, dipped, then turned around, and that’s when buyers showed up.

Growth Takes Back the Lead

Growth stocks led the way with Consumer Discretionary (XLY) as the lead wagon. Interestingly, within the sector, automotive names performed the best. Another great storyline is the sectors in the red, which have been safe havens, but they are also super expensive on an absolute basis.

The S&P 500 (SPX) is still threading the 50-day moving average, but on the wrong side – for now.

Market Breadth

Market breadth was phenomenal, with advancers far exceeding decliners on the New York Stock Exchange (NYSE), and more than doubling them on the NASDAQ Composite.

Volume was impressive, two-to-one on the New York Stock Exchange (NYSE), and almost three-to-one on the NASDAQ.

The only blemish was more “new lows” than “new highs” on the NASDAQ, which underscores the hit-or-miss environment. It is interesting considering the amount of bottom fishing witnessed this week.  Investors are going in for the kill on stocks that have been killed.

Market Factors

Early in the session, growth and momentum were the only green factors, but buying spread throughout the session, and only midcap quality finished in the red.

If this rebound catches investors' fancy, it will be growth that leads the way.

Service Economy Coming on Strong

Folks, the U.S. Service Economy is coming on strong, as the Institute for Supply Management (ISM) number came in at the highest level since mid-2022. Every aspect of the report was fantastic.

After the Close

Yesterday, Anthropic put some pep into the artificial intelligence (AI) trade after revealing its rapid business growth. Last night, Broadcom (AVGO) corroborated the narrative there is a return on AI investment, their AI revenue doubled from last year.

Mags Ready?

Mag Seven closed right on top of the 200-day moving average, where it's been for a week. This is an important stance. When it gets above the 50-day moving average, “Katy, bar the door.”

Portfolio Approach

We made no sector weighting changes in the Hotline Model Portfolio.

Today’s Session

With all eyes on the Middle East, we are still receiving data on the US economy.  Fourth quarter productivity was mixed.

Overall, 2.8% exceeded the consensus of 1.8%, but unit labor costs climbed to 2.8% against the consensus of 2.0%.

I must say the job picture is hanging in there a lot better than I thought it would.

Initial jobless claims were 213,000 and the street was looking for 215,000.

Software names are sparking buying interest. The index has gained 10% since the Citrini Report bottom. 

Comments

Regarding the question of the week: I'm more or less going with that on any given day for a while, depending on the daily headlines concerning IRAN, not to expect too much from a market directional standpoint just yet. The first phase deemed successful at this point is closer to being completed by some accounts, in days not weeks to complete. Entering Phase II and the success of that part will perhaps be determined in weeks, not months ahead. The last mile is always difficult to project as long as those remaining in power continue to push and able to project and act on some ability to strike out offensively within the region or if the country falls into a similar disarray just like IRAQ did. The media will eat any story like that up and report it as it being a complete failure. The wildcard in all of this relates to how soon the existing government is toppled, who it is replaced by short-term and if those leading member countries from the GCC have any plans to step in, influence and assist in the transition process? Terry Dowler on 3/5/2026 9:30:26 AM

I believe we are about to see the true attitude of the general public, not the political hyperbole of the MSM. Conflict tends to motivate the fence sitters into action! My personal bet is that we rise to the occasion and see a new growth era! Tom Sanders on 3/5/2026 11:26:49 AM

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