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Situation Awareness
Situation Awareness: Cautious Bearish. Geopolitical tensions stemming from the conflict with Iran coupled with rising oil prices and Treasury yields are weighing heavily on market sentiment. The major averages are approaching correction territory, slipping below their 200-day moving averages. Trade mode: selective and defensive. Market participants are increasingly skeptical of near-term resolutions to the conflict and its potential economic disruptions, leading to anxious trading. Regime context — 23.61% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 61 bulls vs. 393 bears. The 5-day trend shows a consistent down sequence, confirming downward momentum.
SIP: OXM SGP SSRM KOD
- What’s working: The Energy sector is showing strength. No WaveFinder strategy signals are indicating strong conviction in the current environment.
- Leading sectors: Energy +6.02%; Utilities +1.07%; Materials -1.53%; leading themes: (market closed — no live data).
- Key event — Investors are reacting negatively to rising global yields and weaker treasury demand.
- Market read: Yesterday’s weakness stemmed from a combination of higher oil prices, rising Treasury yields, and mega-cap weakness, culminating in broad market losses. Expectations for a near term resolution to the Iran conflict are fading.
- DEP watchlist: BBY, BF.B, HTZ
- SIPS: AMR, CVNA
Today’s Market Narrative
Equity futures are signaling a lower opening this morning, continuing yesterday’s selling pressure as optimism for a cease-fire between the U.S. and Iran fades. Yesterday, the major averages each closed more than 1% lower, with mega-cap and tech stocks experiencing particular weakness. This culminates in the worst day for the S&P 500 since the conflict with Iran began. The state of the conflict remains murky, with conflicting reports regarding potential troop deployments and the closure of the Strait of Hormuz.
Asian-Pacific markets finished mostly lower, with Japan’s Nikkei down 0.4%, Hong Kong’s Hang Seng up 0.4%, and China’s Shanghai Composite up 0.6%. Major European indices are also trending lower for the week amidst continuous geopolitical uncertainty. These global trends reflect heightened anxiety as oil prices and Treasury yields continue to rise.
The market is showing reluctance to accept that the Iran war is nearing an end without a lasting economic disruption. Rising Treasury yields and crude oil prices, now up $2.29 (+2.4%) to $96.77 per barrel, are adding to investor angst. The weakness leaves the major averages entering today’s session mostly lower for the week and nearing correction territory.
The rising energy prices continue to be a critical factor. Carnival (CCL) is trading lower following its Q1 earnings release due to increasing fuel costs negatively impacting future EPS projections despite record revenue growth. The S&P 500 futures are down 26 points, DJIA futures are down 173 points, and Nasdaq futures are down 141 points. All of these contribute to investor caution and selectivity.
Macro & Policy
The market is increasingly pricing out rate cuts and considering potential rate hikes due to persistent inflation and the energy price shock. Bond yields have risen here and elsewhere. The 2-yr note yield has spiked 52 basis points this month to 3.91%, and the 10-yr note yield is up 42 basis points to 4.38%, with escalating inflation concerns.
The 10-yr U.K. Gilt yield hit 5.00% for the first time since 2008, and Australia’s 10-yr note yield topped 5.00% for the first time since mid-2011 showing the rising global trend. U.S. Treasuries are on track for a lower start in longer tenors. Consumer Sentiment for March fell to 53.3, below the expected 55.5, due to rising gas prices and falling stock prices. The 10-yr is tracking at +3 bps to 4.44% and the 30-yr is at +3 bps to 4.97%.
Economic Calendar Today
- 10:00 ET: Univ. of Michigan Consumer Sentiment – Final for Mar — Expected: 55.5 | Prior: 55.5 — Important indicator of consumer confidence amid economic uncertainties and rising prices.
- Earnings: CCL, LGN reporting this morning. These reports are relevant as they reflect industry specific impacts of the current macro environment of rising rates and inflationary pressures.
Earnings & Corporate News
Unity Software (U) is sharply higher after raising its Q1 revenue guidance well above expectations driven by Unity Vector. They project Q1 revenue of $505-508 mln versus its prior outlook of $480-490 mln. Oxford Industries (OXM) reported revenues in line, guided FY27 EPS in-line, and its shares are trading higher. Carnival (CCL) has provided a solid Q1 performance, but the stock is trading lower with weak Q2 and FY26 EPS guidance reflecting increasing fuel costs. Brown-Forman (BF.B) was upgraded to Neutral from Sell at Citigroup, tgt $28 and Brown-Forman (BF.B) was upgraded to Neutral from Underweight at JPMorgan, tgt $27.Argan (AGX) was upgraded to Overweight from Neutral at JPMorgan, tgt $550.
WaveFinder Signal Summary
The scans are showing a cautious environment. The number of continuation signals is low at 22 signaling lower conviction opportunities across the board. Of those scans the setups worth watching may be CVNA given the trend reversal. WaveScanner shows 23.61% of stocks above the 40 SMA a decline from 26.05% yesterday.
Today’s Watchlist
- CVNA — Showing reversal from market selloff and 2LYNCH, watch for continuation off positive market movement.
- BF.B — Merger talks with Pernod Ricard and analyst upgrade provides possible upside momentum near term.
- U — Raising Q1 guidance, driven by Unity Vector’s performance.
- CCL — Solid Q1 performance despite fuel cost headwinds. Monitor consumer spending trends amid inflation.
- AGX — Upgraded to Overweight from Neutral at JPMorgan, tactical value play for today.
- OIH — Geopolitical tensions and rising oil prices could lead to further upside, watch for breakout.
Action Codes of the Day
CRT Controlled Risk Taking — With geopolitical and economic uncertainties high, taking calculated risks is crucial to preserving capital.
COUGAR Patience play — Volatility is elevated; waiting for high-probability setups will be key to success while avoiding whipsaws.