Market Anticipates Iran-Israel Conflict With Clear Trading Strategy Taking Shape
As the U.S. sits firmly in the midst of escalating geopolitical tension, the market is selling off and opportunity rises.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
The market hasn’t had any good reason to sell off recently, but it has a good excuse for Tuesday morning.
Reports are hitting that Iran is preparing to "imminently launch a ballistic missile attack against Israel." The U.S. is actively supporting defensive measures. Israel is very likely to retaliate and go after Iranian weapon sites and nuclear facilities, so the likelihood of escalation is very high.
Oil USO has spiked up by almost 3%, and there is broad market weakness. Nasdaq 100 QQQ breadth is running at about 20 gainers to 80 decliners and, overall, breadth is around three-to-one negative.
Apple AAPL is particularly ugly. After a very strong 2.2% upside move on Monday, it is down 3.3% on Tuesday. It was a classic bull trap, and now the issue is whether it will lose another few percentage points and fill the gap to the 50-day simple moving average at around $222.
I’ve been premature in anticipating corrective action, but this is what I’ve been expecting for a while now. The question now is how deep the selling goes before we see support.
The indices have some fairly large air pockets before they are any decent technical levels to serve as consolidation areas. There are quite a few names I want to add lower as we move into earnings season, so I can’t say that this action is unwelcome.
My best advice is to make sure you have a shopping list and then follow those stocks carefully. For example, I’ve mentioned wanting to add Nvidia NVDA. It is breaking down about 3% on Tuesday, and I’ll look at a partial buy of around the 50-day simple moving average under $116.
I’m particularly interested in ramping up position size in Humacyte HUMA and Xeris XERS, but there is no reason to do much there currently.
The name of the game right now is patience and vigilance. The good news is that we needed this sort of action to create the next big wave of opportunity.
At the time of publication, DePorre was long NVDA, XERS, HUMA and HUMAW.
