It was a rocky finish yesterday, but after 11 days of winning, the market is entitled to stumble into the close.

The Best Offense

There is an old saying that “the best defense is a good offense,” but not when it comes to the stock market. Health Care (XLV) brought up the rear again.

Health Care is now in free-fall mode after coming out of the gate with gusto this year. The trade finally caught on last year, even though it was a favorite of the “smart” money crowd for a long time.

Part of the problem is the patent crisis for drug companies, which creeps up every decade or so. These behemoths are too busy milking existing drugs with maneuvers to buy time on the patent clock; it seems they never have anything new in the pipeline.

Now, they are buying biotech names at hefty premiums.

Consumer Staples (XLP) stocks erupted higher at the start of the year and during the initial weeks of the Iran Conflict. But they are coming down hard.

Investors are told to diversify for greater gains and, at times, to load up on defensive names to shield portfolios during difficult periods.  You cannot get rich with that playbook. Meanwhile, defensive names are becoming less relevant to the overall market.

Factors

The rally ran out of steam, but most factors opened higher for the session. Quality was another disappointing area that smart investors implored everyone to be in while eschewing tech in 2024, 2025, and again this year. Their aristocratic arrogance has resulted in paltry returns.

Chips Fly

Semiconductors (SMH) are crushing it, making a parabolic move after retaking the 50-day moving average.

A month ago, I was digging out from another snowstorm that battered the East Coast relentlessly this past winter, and the stock market was surging in ‘extreme fear.’

Now, the sun is shining, and ‘greed’ is driving the market.

I love the stock market.

Today’s Session

Major indices are rallying after Iran’s Foreign Minister said the Strait of Hormuz will now be open to all commercial vessels throughout the ceasefire.

This was later confirmed by Trump.

Oil prices are plummeting lower following this announcement.

Furthermore, the Ten Year Tresury Yield (TNX) is also 7.5 basis points lower and breaking below 4.25%.

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