3/9/26 Recap

The SPY is bouncing hard off lows today as oil falls way off its highs from last night and the VIX rapidly cools down. The bigger issue here is the 8 and 21 ema are sloping down and now that means we’re in a process of trying to find a bottom, they now need to flatten out and be reclaimed before we can talk about an uptrend. Trump did just speak and say he’s unhappy with Iran’s new leader but he also has no plans for a ground invasion now, the market loved that and oil fell even more. Being so close we likely will touch that 200 day(green line) soon and that is where you want to see the market start to build a base.

Oil completely collapsed off the highs of last night falling 20% in 12 hours. This could be a blowoff top but if we don’t figure out how to get this Strait of Hormuz situation under control, this will be a prolonged mess, Iran warned oil could go to $200. Ideally we’d see oil reverse very quickly or it will cause all sorts of problems for us at home.

Look the reality of the matter is the Iranian regime is awful, but unless you want skyhigh gas prices, inflation and a recession to deal with, there is almost no way to attack this problem which is why we haven’t in their near 50 year reign of terror. We run on short election cycles in the US and it’s wildly unpopular with most normal people when oil goes up 100% in 2 weeks due to wars overseas. So I don’t know how this ends, but my guess is it will sooner than later. There is still one major problem potentially looming though and if we don’t get a quick move up this week, it could get ugly. The issue at the moment is we’re on the cusp of a weekly 8/21 crossover to the downside in the QQQ, this is not a common event and the last few have led to nasty prolonged moves down, let’s take a look. You will notice below the 8(dark blue) is about to cross down through the 21(light blue), the last time this happened was last March and led to a multi week drawdown.

The time before that? In early 2022 right before the Russian invasion of Ukraine, the market is always ahead of these things, and it led to a multi month drawdown in the QQQ. Notice how never bottomed until the 8 week crossed over the 21 finally?

And before that, 2020, covid, below, was the last one where we had another multi week bear market once that 8/21 cross down happened.

So the point I’m getting at is the 8/21 does not see bearish crossovers down often, we may see one this week. Why are they rare? Well it takes time to form and stocks do go up probably 90% of the time. Still you have to respect the fact that the few times you do see a crossover it is typically followed by a multi week period of pain. Is this one? We’d need to see confirmation on friday but we’ve had 3 in the last 6 years and they were all painful. So if we don’t have a really sharp recovery by friday I think you want to start thinking about removing some positions or leverage if you’re heavy on tech. Don’t panic now, we have to see how the week closes, Trump could still completely reverse course on things and stocks take off. Do with this information what you will but charts are a visualization of buying and selling in the marke and history tends to repeat itself. Its best to listen to what the charts are telling you and a weekly 8/21 bearish crossover has not been a good thing, could this be the first that works out right away? Sure but hopefully we can avoid it by this friday, we’d need a very strong close to this week and carryover next week.

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