Relief Rally for the Stock Market Underway But Oil Says Not So Fast

Trading Environment

• High volatility, action-packed week
• Geopolitical tensions (Middle East war, Iran) remain a dominating factor
• Market experienced a relief rally
• Turnaround Tuesday after de-escalation comments
• Market gapped down on Thursday, buyers pushed to close high
• Change of market character: opening low, closing high
• Crude oil (WTI, Brent, USO) at new highs, a key concern for global economy
• Nonfarm payroll report was an upside surprise, unemployment declined
• SpaceX IPO buzz creating interest in space stocks
• All major indexes and bonds closed green this week
• VIX fell from over 30 to around 24, but still elevated
• Treasury yields remain elevated at 4.3%, but saw a slight relief
• Energy sector diverged: USO up, energy stocks down
• Materials (XLB) is the only sector in a bullish state by smart trend filter
• 52-week highs and lows numbers remain shallow
• Percentage of stocks above 20 SMA no longer oversold (53%)
• Bitcoin is sideways, testing key support at $65k
• Key economic data next week: CPI, consumer sentiment, ISM, Core PCE
• S&P 500 near 10% correction level on Monday lows, bounced back
• Nasdaq 100 (QQQ) had a 12.65% drawdown from highs, nice rebound
• Hedges are burning off with market pops, creating a "cleansing process"

Watchlist

• Biotech (XBI, IBB): Seeing M&A, attractive premiums, pent-up energy. XBI popped to top of its range on volume. Maintain position.
• Crude Oil (USO): WTI futures at new closing highs, Brent also high. Essential to watch trajectory for economic stress.
• Semiconductors (SMH): Concentrated leadership group, bounced above 375 support. Desired at lower prices (mid-350s, low-300s).
• Micron (MU): Key proxy for memory DRAM in AI story. Sharp 30%+ correction after strong earnings; watch for footing.
• Materials (XLB): Showed relative strength, follow-through week. Diverging from broader market, trying to break out of multi-year range. Position taken.
• Space Stocks (PL): Rallying due to SpaceX IPO news. PL saw big move up on Friday despite volatility.
• Light: Technology/electronic component stock, closed week at highs. In a current portfolio position.
• SATS: New signal, telecom/electronics sector. Beautiful breakout pattern.
• Flex: Technology stock, holding position.
• New Signal (Optical Fiber Space): New buy signal for Monday in tech/electronic components.
• Tesla: Delivery numbers below expectations, sold off into week-end, did not rebound with market.

Outlook & Advice

• Market is not "out of the woods" yet.
• Expect sideways volatility for longer (months likely).
• Strong moves up followed by strong moves down expected until geopolitical clarity and earnings season.
• Relief rallies are good times to rebalance and rightsize risk.
• Market approaching overhead supply/resistance levels; expect hesitation/sellers.
• Need stability in 10-year Treasury yields and falling crude oil prices for market comfort.
• Individual stocks still presenting opportunities for experienced traders.
• High cash allocation, lower/smaller position sizes, dial back risk recommended.
• Be patient for trends to return; current environment favors traders, not long-term investors.
• Be willing to tolerate volatility; adjust position sizes accordingly.