Yesterday’s session was textbook. Safe-haven sectors rallied, led by Energy (XLE), as crude oil prices continued to rocket higher. It helps to explain why Industrials (XLI) were hit. The hottest sector of 2026 is being repriced.

Although the market was exhibiting resolve ahead of the opening bell, I wrote yesterday that the session was doomed to sell off into the close. Crude oil remained higher, especially after the media ran with a statement supposedly from the “Supreme Leader.”

When the market comes under this kind of selling pressure, buyers would like to see it enter to “extreme fear” and bearishness. The Fear & Greed Index slipped into the “extreme” zone.

Retail Sentiment

Retail investor sentiment became significantly more bearish. It is a good level to bounce from, but the longer it takes to get ships moving in the Strait of Hormuz, the more the April 2025 bearish sentiment comes into play. Keep in mind that sentiment and actions are two different things, and retail has been an aggressive buyer of the dip.

Good News Like That Proverbial Tree

You know that question: If a tree falls in the forest and nobody is there to see it, does it make noise?  That’s how good economic data has been all year long, even before the Iran conflict. I think it can all resume quickly if the conflict is resolved by the end of the month.

Today’s Session

Lots of economic data out this morning and while it might seem irrelevant considering the direction of inflation will shift slightly higher, which the dynamism of the economy will slow, but this news today informs on the overall trend and momentum before the Iran Conflict. 

Personal income climbed significantly but spending held at the same level. 

PCE came in below consensus. 

The market looks to open slightly higher.  I’m very confident the Iran Conflict will end in a manner that completes most of the mission and removes the threat from the Strait of Hormuz.