Traders are edge amid the US and Israel launching a major attack on Iran.
So let's look at the 5 things you need to know right now.
1. Crude Oil Went Parabolic. Did It Peak?
The military conflict in Iran sent crude oil up over 30% this week.
And the RSI on crude oil futures hovered around 87 Friday morning.
In recent years, crude oil has tended to fade after hitting RSI levels in the 85+ range.
So should we short crude oil?
It's a tough question.
Because we could walk into any kind of news come Monday morning.
So shorting oil feels like a binary bet on things like:
- The status of the Strait of Hormuz
- Whether Iran is open to a deal
- What President Trump says on Truth Social at 3 in the morning
Interestingly, the red hot oil service sector sold down hard this week, which feels like a massive “sell the news.”
Oil service stocks had been ripping because higher oil prices mean more oil projects become economically feasible. (plus the favorable regulatory backdrop)
But now it looks like an awful lot of news was priced in.
And believe it or not, OIH was as high as $440 early Monday morning.
Now it's around $375, 14% off that high.
2. Lousy Jobs Report = FOMC Rate Cuts?
On Friday morning, we got the February Nonfarm Payrolls report, and it was a mess, even taking into account temporary factors impacting the numbers.
But is the FOMC needle moving?
Yes. A little bit.
Markets are now pricing in a 50.4% chance of a rate cut by June, up from 33% yesterday.
So the market sees:
- 42.3% chance of 25 bps in cuts
- 7.8% chance of 50 bps in cuts
- 0.3% chance of 75 bps in cuts
Of course, the rising price of oil is inflationary.
And next week, we have multiple key US economic data reports including CPI, Existing Home Sales, ADP Employment Change, GDP, and Core Price Index.
So we should get more insights into the state of the US economy.
3. Palantir Perked Up
Most tech stocks had a rough week.
Palantir (PLTR) was an exception thanks to its close ties with the US and Israeli military:
Palantir's AI systems are reportedly used for applications like target identification.
The military-industrial complex is rapidly becoming the military-industrial-data complex and Palantir (along with companies like Anthropic) is at the heart of it.
The Times reports that 20 soldiers using Palantir AI are accomplishing a workload that required a team of 2,000 during the US invasion of Iraq.
Traders often ask the most obvious question about Palantir: why is this stock trading at 50 times sales?
The answer is simple.
The US military can't (or won't?) live without Palantir's technology.
And the US military wants to keep that tech to itself.
4. Traders Are in a Funk
Investors and traders are still in a funk.
The AAII Sentiment Survey shows that 33.1% of investors are bullish.
This is the third straight week of below-average bullishness.
And it's well off the 49.5% high set on January 14.
Meanwhile, the CBOE equity-put call ratio is 0.6o, which is in the range of neutral.
So traders are far from euphoric.
This is a positive because it implies few traders are all-in bullish.
In fact, it seems like everyone's waiting for resolution on Iran before placing their chips down.
And odds are, if equity markets keep weakening, bullish sentiment should drop below 30% next week.
5. An Ugly Stock Is Looking Beautiful
The single worst stock in the S&P 500 this year is tech research & advisory company Gartner (IT). According to conventional wisdom, Gartner's business looks ripe to be eaten by AI.
On February 3, the stock dropped 20% after the company reported weak guidance.
But on March 5, Sami Abusaad added the stock to his Number Ones swing trading newsletter at $167.63.
And it's starting to fill that big ugly earnings gap:
Wall Street's indifferent on the stock, with 4 buys, 9 holds, and 2 sell ratings.
But the stock looks like it's under accumulation.
Will be interesting to see where it is in a month.
