Situation Awareness
Situation Awareness: Cautious Bearish. A spike in oil prices due to renewed US-Iran conflict concerns is driving market sentiment, overshadowing recent gains. Index levels unavailable for today, so relative positioning to key MAs cannot be assessed. Trade mode: selective and defensive. Geopolitical tensions, fueled by President Trump’s combative rhetoric, are the primary market driver, overshadowing any positive economic data. Regime context — 0% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 0 bulls vs. 0 bears. The 5-day trend shows a consistent down sequence, confirming downward momentum.
SIP: BNO DIA ADAG
- What’s working: Reversal scans are showing the highest signal counts today.
- Leading sectors: Energy (2.35) driven by oil price surge, Utilities (1.71) and Materials (-0.47) showing slight positive trends; leading themes: data unavailable.
- Key event: President Trump’s speech triggered renewed conflict concerns and market volatility.
- Market read: Yesterday’s rally on ceasefire hopes has been completely unwound by a hawkish shift in geopolitical sentiment.
- DEP watchlist: AEG, BTG, CNTA
- SIPS: ASIX, ETR
Today’s Market Narrative
Equity futures are pointing to a sharply lower open this morning after President Trump’s address reignited concerns about the duration and intensity of the conflict with Iran. S&P 500 futures are down 98 points at 6,519, DJIA futures are down 622 points at 46,184, and Nasdaq futures are down 469 points at 23,725. This reverses much of the gains achieved in the previous two sessions, which were driven by optimism toward a potential ceasefire. The energy sector is taking center stage, while broad market sentiment appears to be pivoting back to risk-off.
Yesterday’s gains, which made the prior sessions positive, were fueled by indications that the US and Iran were seeking a path to de-escalation. However, President Trump’s remarks last night, including renewed threats against Tehran and promises to “bring them back to the stone age,” have reignited fears of a protracted conflict. The spike in oil prices, up $9.23 (+9.2%) to $109.35 per barrel, is exacerbating these concerns, particularly given the global economy’s vulnerability to supply chain disruptions.
Asian and European markets also reflected this renewed anxiety, with major indices trading in the red. Japan’s Nikkei fell 2.4%, Hong Kong’s Hang Seng and the Shanghai Composite both dropped -0.7%. The German DAX fell -2.2%, the U.K.’s FTSE 100 fell -0.2%, and France’s CAC 40 fell -1.2%, highlighting the broad impact of geopolitical uncertainty and rising energy costs. The strength from positive February trade surplus from Australia is not translating into strength to the broader market.
Investors will be closely watching today’s economic data, including the February Trade Balance and weekly initial jobless claims, for further clues about the health of the economy amidst this geopolitical uncertainty. However, market sentiment is likely to remain dominated by news flow related to the conflict in Iran.
Macro & Policy
President Trump’s speech has had an immediate consequence of escalating inflation concerns and driving treasury yields up, causing concerns that the fed funds futures market has assigned a 37% probability to a 25-basis-point hike at the December FOMC meeting. The 10-yr note yield is currently at 4.37% and the U.S. Dollar Index is up 0.6% at 100.23. This reinforces the dynamic wherein rising oil prices stemming from shipping disruptions through the Strait of Hormuz are fueling inflation fears driving treasury yields higher and suppressing expectations for rate cuts.
The bond market has started lower. Foreign investors sold equities and JGBs aggressively which may increase U.S. treasury supply. Overseas central banks are diverging policy paths: Bank of England Governor Bailey cautioned against pricing in rate hikes while the European Central Bank is expected to hike rates a couple times. This has important implications for currency valuations. The U.S. Dollar Index is up 0.6% at 100.23, and pressures on the Yen may continue.
Economic Calendar Today
- 08:30 ET: Weekly Initial Claims — Expected: 215K | Prior: 210K — Reflects labor market conditions amid geopolitical uncertainty.
- 08:30 ET: February Trade Balance — Expected: -$55.8 bln | Prior: -$54.5 bln — Provides insight into trade dynamics amid global supply chain concerns.
- 10:30 ET: Weekly natural gas inventories — Prior: -54 bcf — Influences energy prices and inflation expectations.
- Earnings reporting today (pre/post market): AYI, LNN.
Earnings & Corporate News
Earnings news is taking a backseat to geopolitical events today. Acuity Brands (AYI) beat EPS estimates by $0.14. However, they are missing revenue expectations. Lindsay Corp (LNN) missed earnings by $0.55 while also missing on revenue expectations.
In corporate news, Amazon (AMZN) is in discussions to acquire Globalstar (GSAT). Additionally, Context Therapeutics (CNTX) gains FDA fast track designation for CTIM-76 in ovarian cancer. Further, the Trump adminstration will announce new tariffs on drugmakers that haven’t agreed to lower prices.
WaveFinder Signal Summary
The WaveFinder scans reflect today’s risk-off tone. The continuation scan has 13 signals showing decent breadth. However, broader bearish sentiment is revealed in the declining percentage of stocks above their moving averages: only 26% of stocks trade above their 20 SMA, down from 39% on the previous day, and 0% above their 40 SMA, down from 29.39% yesterday. The scans are dry.
Today’s Watchlist
- BNO — Oil trading higher on Iran war concerns; momentum play as tension rises.
- ADAG — Shares dropping after public offering; potential short opportunity.
- RH — Large reversal signal after disappointing guidance.
- ETR — Utility with 2LYNCH continuation setup; may benefit from risk-off rotation.
- ASIX — Chemical company with a 2LYNCH setup and high ATR%; has momentum.
- BTG — D9M signal in mining as safe haven asset.
Action Codes of the Day
COUGAR — Patience play — Wait for the right pitch, don’t force trades — The market is very volatile presently due to escalating geopolitical problems.
FHP — First Hour Pass — Let the market show its hand before committing — The market is very volatile presently due to escalating geopolitical problems.