We knew yesterday would be a difficult session (right out of the gate), after the hammering of memory stocks that took place in Korea, but it was better than I anticipated. The carnage took place with the names that have been on a bender.

Heat Map

Investors flocked to traditional safe havens, namely, Consumer Staples (XLP), Health Care (XLV), and Utilities (XLU) sectors. Energy (XLE) got a boost from the bounce in crude oil, on reports that Iran attacked two commercial oil tankers. AI-adjacent names also took it on the chin, including Caterpillar (CAT) and GE Vernova (GEV).

Some “Mag Seven” names saw bids return, as they resumed their role as safe havens as well.

Factors & Themes

You know it’s a rough outing when only “Low Volatility” is flashing green. On the other hand, momentum was slammed, but it could have been worse.

We have been reminded that momentum (SPMO) swings both ways. It's come down like a rock (see rate of change) and now rests on the 50-day moving average.

Off the Beaten Path

The aging population, cloud computing, and e-commerce are fetching bids. We are paying attention.

I think the selling is driven more by speculation than the run-up was. That said, many key stocks finished right at their 50-day moving average. Let's see if they can make a stand; otherwise, many would-be strong hands will grow weaker.

Several of the stocks in the retracement are names I wanted to buy, and some I felt that we closed out too fast.

Today’s Session

The ceasefire is off, and markets are reacting, though with restraint, given the ups and downs of efforts to end the Iran Conflict.

Stocks were already vulnerable before this most recent escalation, but underlying fundamentals have improved.

In this emotionally charged atmosphere, you must know what you own.

Know the industry and its growth potential.

Know the company and its positioning, including the ability to raise prices and capture market share.

Try to avoid taking losses simply because a stock is down – it might be a buy and not a sell.

I’d like to see the S&P 500 hold above the 50-day moving average and, in the worst-case scenario, hold above 7,200.

The headlines will be proactive all sessions but also keep an eye on what’s not said (Trump hasn’t repeated that the ceasefire is over) and what’s moving (oil still moving through the Strait).

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