3/8/26 Best Idea For The Week Ahead

The SPY just had its first weekly close under the 21 week since last April. Historically this leads to a 4-5 week drawdown that leads to a touch of that 50 week(yellow line). Alot of people don’t remember but we were already under the 50 week last year heading into the day Trump announced his tariff war and we instantly flushed down to that 100 week and he turned course very quickly because he couldn’t stomach the damage to the market. I believe this situation is similar but since we haven’t had any real pain in the markets yet, we’re only 4% off of highs, he will press things for a bit and I imagine if markets react negatively to the tune of 10% he will change course. He really doesn’t have much wiggle room with this war, midterm elections are in 7 months and nothing hurts consumers more than higher prices at the pump combined with a weak market crushing the wealth effect. As bad as things feel, overall they’re not that bad, it just feels that way because all the tech names are so far off their highs and that is what most people tend to be in. Can you blame them? These energy names are nice trades from time to time when geopolitical chaos emerges, but for the most part, energy names are mediocre long term investments. Take Exxon, it is up 60% in total ex dividends since its 2008 highs, and that’s the biggest name in the energy space. That is terrible for an 18 year timeframe considering the entire market is up 5x since. So while the energy bulls are having their moment in the spotlight, these things are not typically long lived historically.

This weeks best idea is a defense large cap that has seen a plethora of put sales recently which usually should mark a near term bottom. We’re going to look at these put sales and with the VIX at 30 right now, there is no better time to sell puts like these because of the additional premium received with all the extra risk premium built in thanks to the war fear. Typically with a VIX like elevated like this you do not want to be buying premium but you want to be selling it. So don’t think about calls for the time being because if the VIX deflates hard, you could see names rally hard and your calls still get smashed.