We're living through one of those rare moments when the market's reaction tells a different story than the headlines. While news feeds flash with images of conflict and energy infrastructure under siege, something unusual is happening beneath the surface of the selloff.

Last week brought us to the lowest close of 2026, with the S&P 500 settling at 6,506 after a punishing 1.96% decline. Iran and Israel continued to exchange strikes throughout the week. Natural gas facilities, LNG plants, and critical energy chokepoints became targets. The Pentagon reportedly sent thousands of additional Marines to the region. Markets sold off sharply, exactly as you'd expect.

Then, at 5:13 PM ET on Friday, after futures had closed, President Trump made comments suggesting the U.S. is considering 'winding down' operations in the Middle East. The S&P 500 ETF surged nearly two percent from its low in after hours trading.

But here's what makes this week's report different. Beyond the geopolitical headlines and the violent price swings, we're seeing technical and sentiment readings that historically don't stay ignored for long. Investor sentiment has now fallen 18.5% from its level 13 weeks ago and sits at its lowest point since Liberation Day. When sentiment has reached current levels in the past, the S&P 500 has been higher one month later 87% of the time, with average gains of 4.4%.

So the questions we're exploring this week are critical: Are markets becoming overly bearish in their outlook? Is the downside trade getting crowded? And most importantly, when the war headlines inevitably fade, what happens to all the positions built on fear?

We believe markets are setting up for a significant reversal. The technical damage is real, but it may also be creating one of the better entry points we've seen this year. Let's examine why.

The S&P 500 closed the week 1.96% lower at 6,506, marking another highly eventful week dominated by Middle East developments. Iran and Israel exchanged strikes throughout the period, with both nations also launching attacks against energy infrastructure across the Persian Gulf region.

The week's most significant developments came from coordinated strikes on critical energy facilities. Israel struck Iran's largest natural gas plant, which also ranks among the largest globally. In retaliation, Iran struck Qatar's Ras Laffan facility, the world's largest LNG plant, responsible for 20% of global LNG supply.

Military escalation intensified when the Wall Street Journal reported, citing U.S. officials, that the Pentagon is sending thousands of additional Marines to the Middle East. This development further intensified the selloff on March 20th. CBS News indicated that 'heavy preparations' were being made for deploying ground troops to Iran, citing multiple sources.

Markets remained under pressure, closing around the 6,500 level, until a major shift in outlook emerged from President Trump at 5:13 PM ET on Friday, after futures had closed. Prior to markets closing, President Trump told reporters he is 'not interested in a ceasefire with Iran.' However, comments made after the bell stated the U.S. is considering 'winding down our great Military efforts in the Middle East.' The S&P 500 ETF surged nearly two percent from its low of the day in after hours trading on this announcement.

From a technical perspective, the S&P 500 fell 100 points on March 20th alone. This resulted in a sharp drop below the 6,540 daily bottom Bollinger Band and marked the first weekly close below 30 in the daily RSI since April 2025. Price action is now trading right above 6,500 support, which represents the bottom end of the recent downward trending channel.

More significantly, sentiment readings have reached levels that historically favor buying stocks for at least one month. Sentiment has fallen 18.5% from its level 13 weeks ago and now sits at its lowest point since Liberation Day. When sentiment has first reached current levels since 2002, the S&P 500 was higher one month later 87% of the time, with an average gain of 4.4%.

On Friday, stocks closed below the October and November lows for the first time. The move came with selling pressure, as net buying indicators fell below February lows. This suggests money is leaving the market. However, this pattern often occurs as markets bottom, providing confirmation of the downside move rather than signaling further decline.

The odds of an interest rate hike in 2026 rose to 50% last week, with rate cuts now nearly entirely priced out. We believe this represents a far too hawkish outlook. Markets began briefly pricing in a 50% chance of a potential interest rate hike in 2026, marking a sudden shift in sentiment.

Currently, the base case shows interest rates remaining unchanged through July 2027. This marks a massive shift in the hawkish direction from previous expectations, which anticipated at least two interest rate cuts in 2026. We expect expectations have shifted well too far in the hawkish direction.

We believe containing the rapid surge in the bond market will soon become a top priority for the Trump Administration. Central banks in Europe held rates steady this week as policymakers grappled with the war's impact, with markets increasingly pricing in rate increases this year to contain higher prices.

Despite broader market weakness, the Technology sector continues to demonstrate relative strength. The Technology SPDR continued to hold above its November lows, which also served as resistance last summer and where the sector gapped higher in September.

We think a strong growth story remains behind most technology stocks. Following the breakdown in software names, talk of a bubble dominated discussions before the Iran War began. Yet Technology as a whole is holding up, with price control for the group standing above $140.

There have been consistently lower highs since the peak of earnings season. However, each touch of $135 since the September gap has been bought. A move back above $140 would break that trend line of lower highs. Therefore, a move out of the $135 to $140 range would likely signal direction for the overall market.

Stock prices correlate closely with earnings estimate revisions, and guidance announcements lead them. Both guidance ratios and earnings estimate revision ratios peaked in January. Guidance held up better initially, but market observers have been lowering estimates since the peak of earnings season. This creates a headwind for stock prices.

When estimate revisions trend higher, the S&P 500 averages a gain of 4.7% over the subsequent quarter. However, when they trend lower, the S&P 500 has averaged a gain of just 0.85%. More importantly, both guidance and estimate revision ratios sit around levels last seen at the start of 2022, which proved to be a bear market for stocks.

With earnings season just three weeks away, companies still need to lower guidance due to disruptions in the Middle East and higher fuel prices. This trend began this week with Core Lab indicating that oil producers in the region are shutting down production rather than just delaying projects. Such developments create negative implications for energy services companies and equipment manufacturers.

We believe the post market close developments on Friday, combined with a severely oversold S&P 500, are setting up for a sizable reversal in the week ahead. President Trump's comments about potentially 'winding down' operations in the Middle East represent a significant shift in tone that markets will likely respond to when trading resumes.

We expect Friday's gap up to 6,595 to be filled and anticipate a retest of the top end of channel resistance, which currently stands at 6,650. The combination of extreme oversold conditions, historically favorable sentiment levels, and potential deescalation creates what we view as a compelling setup for buyers.

We continue to believe the war will not drag on for months and think markets are becoming overly bearish and hawkish in their outlook. Amid all the geopolitical noise, the AI Revolution is only accelerating, and we expect that narrative will reclaim the spotlight as soon as the war ends.

While sentiment suggests the downside trade has gotten crowded and there is room for higher prices, there remain plenty of reasons to approach a rally cautiously. The average monthly gain when sentiment is this low is only 4.4%, and approximately a 4.0% reversal to the upside off pre market lows doesn't represent the optimal entry point.

Unless we see more buying pressure this week, a move higher should likely be sold. After six months of putting in a rounded top above $677 for the S&P 500 SPDR, or 6,795 for the S&P 500, this area should be viewed as resistance. This doesn't provide much upside room from current levels.

We expect the market strategy will focus on trading long ahead of earnings, particularly on weakness, while trading short after news releases. This approach takes advantage of the current environment where pre earnings positioning can be favorable while post announcement reactions remain unpredictable.

We're not seeing the impact in U.S. economic numbers yet, but spikes in oil prices have typically had negative effects on economic activity. Recent credit and debit card spending data showed an increase in consumer spending, but it was mainly due to higher spending on airlines, gas, and transit.

This pattern risks eating into consumer budgets and negatively impacting spending on more discretionary items. If oil prices remain elevated, we could see a broader slowdown in consumer driven sectors. Transportation companies face margin pressures with oil hovering around $100, and market breadth has turned negative for the group as prices return to previous resistance levels.

WTI crude for May 2026 delivery closed the week 0.98% higher at $98.10. The modest gain came after Iraq declared a force majeure at all oilfields operated by foreign companies and drones struck two refineries in Kuwait. Iraq oil ministry sources told news outlets that Baghdad declared the force majeure because it cannot ship crude through the Strait of Hormuz.

Israel struck key gas facilities in Iran while Iran struck Qatar's LNG facilities, developments that drove energy prices higher outside the U.S. However, WTI crude was little changed on a net basis for the week. The reality is that the U.S. is relatively shielded from the Strait of Hormuz closure.

Crude oil prices in Oman are trading at a $70 premium to WTI crude, hitting record highs. The U.S. gets less than 8% of its oil from the Persian Gulf, at just 500,000 barrels per day. As long as the war does not drag on for months, we believe the rally will be somewhat contained.

WTI crude prices have been trading with relative weakness over the last few sessions. We observed multiple consecutive daily lower highs last week, including at $98.75 on March 20th. The daily RSI is now in a downtrend, rejecting approximately 75 resistance last week and dropping into roughly 70 by Friday's close.

The daily bottom Bollinger Band sits way below current levels at $57.82, and a large gap exists in price action below $92.00. President Trump's announcement after markets closed on Friday that he is considering 'winding down' the Iran War is expected to strongly benefit crude oil short positions when trading resumes Monday.

This week, we anticipate early pressure on crude oil prices to trigger a drop back toward $90.00. Therefore, we think WTI crude presents a bearish opportunity with an $87.00 target and $105.00 stop loss.

Natural gas prices for April 2026 delivery ended the week 1.50% lower at $3.10. Healthy storage inventories and the fast approaching shoulder season have outweighed the uncertainties of an escalating conflict in the Middle East, dragging down U.S. natural gas prices.

Last week's Israeli strikes targeted Iran's largest gas field, followed by strikes on Qatar's Ras Laffan LNG facility, the world's largest producer of LNG. However, price spikes in natural gas have been largely seen outside of the U.S., such as in the European market, as the U.S. backdrop remains adequately supplied.

The EIA reported a 35 Bcf storage injection for the week ended March 13, 2026, marking the first net inventory increase of the season. The report indicated 1,883 Bcf total working gas in storage, which was above last year and above the five year average, adding pressure to prices.

We expect weaker weather fundamentals and a generally oversupplied U.S. market will continue to limit breakouts in natural gas prices. Natural gas has been largely capped around $3.30 resistance, with another rejection of that key level observed last week at the $3.27 high on March 19th.

We think this rejection opens the door for a drop back below $3.00, as bulls have consistently failed to gain momentum after reaching the top end of the recent range. We anticipate a drop into our $2.90 target can come particularly quickly if discussions of a potential deal or ceasefire begin to emerge. Therefore, we see natural gas as bearish with a $2.90 target and $3.40 stop loss.

Gold prices for April 2026 delivery closed the week 9.77% lower at $4,575 per ounce, marking the worst week since 1983. The ten year note yield extended its rally toward 4.40%, now up over 40 basis points since the Iran War began. Investors continued to rotate into cash during this period of market stress.

The U.S. Dollar Index rejected 100.50 resistance and closed the week at 99.50. We believe it is setting up for more downside in the coming weeks as the Iran War rally in the U.S. Dollar has lost some momentum.

Many market participants are confused as to why gold is falling during a time of immense uncertainty. However, that confusion is alleviated when zooming out. Over the short term, investors are rotating into cash and back to the sidelines, particularly as the U.S. Dollar has rebounded.

Over the medium to long term, inflation expectations are rapidly rising. One year inflation expectations now stand at 5.2%. We think asset owners, along with gold prices, will continue to be some of the biggest beneficiaries of this major shift in macroeconomic conditions.

Additionally, as Fed expectations have become overly hawkish amid a rapidly deteriorating labor market, we expect gold prices will benefit from the inevitable relief rally in expectations. The market has become too pessimistic about the Fed's ability to cut rates this year.

Gold markets have experienced some of their most oversold conditions over the last few sessions. The weekly close came well below the $4,704 daily Bollinger Band, and the daily RSI briefly broke below 30 last week for the first time since October 2023.

Following President Trump's comments after markets closed on Friday, gold prices rebounded nearly $100 per ounce from their low of the day. We anticipate a push back into the bottom end of channel resistance at $4,750 is coming next.

The near-term technical correction has left gold in a more healthy long term position. We think the fundamental merits of gold ownership are as strong as ever. Therefore, we view gold as bullish with a $5,000 target and $4,300 stop loss.

The yield on the ten year note closed the week 10 basis points higher at 4.38%. Investors began to fear that the Federal Reserve may not lower interest rates at all this year as the war in the Middle East threatens to drive inflation higher.

We believe expectations have shifted well too far in the hawkish direction. We expect President Trump's comments about potentially beginning to 'wind down' operations in the Middle East will provide some relief to bond markets early this week.

The reversal we have seen in the iShares 20+ Year Treasury Bond ETF since the start of the war has been highly one sided. After breaking below $90.50 uptrend support, we saw an effective straight line lower into the $85.83 close on March 20th. This came with a brief cross below the $85.68 daily bottom Bollinger Band last week and a drop into approximately 35 trendline support in the daily RSI.

This represents the same technical setup seen prior to every major technical relief rally or bottom since November 2025. This week, we anticipate the ETF will fill its gap to the upside from March 20th into $87.00 and potentially move back above last week's $87.73 high. Therefore, we think bonds are bullish with a $93.00 target and $85.00 stop loss.

Entry Consideration: Look for entries on weakness below $25, with potential upside to $31 if the company returns to positive guidance

Chewy reports fourth quarter fiscal results on Wednesday, March 25th at 7:05 AM ET. The company will provide not only fourth quarter results but also first quarter and initial fiscal year guidance. The consensus estimate stands at $0.28 per share on revenue of $3.26 billion.

Last quarter, Chewy beat consensus estimates but fell short of higher expectations. The stock gapped higher on the initial news but immediately started selling off. In late January, the stock fell through the $31 line, which had served as support throughout 2025.

The real issue was the company's fourth quarter guidance, which fell short of estimates and implied revenue growth of just 0.4%. This marked the company's first negative guidance announcement since the same quarter two years earlier. The disappointment led to a sharp decline in the stock price.

The prevailing view is that the pet industry remains stable and Chewy continues to take market share. Market observers believe the company will set a floor for estimates for the year with this report. The focus will then shift to whether Chewy can return to a pattern of beating estimates and raising guidance for the remainder of the year.

In the near term, guidance likely just needs to include a first quarter outlook that brackets estimates. Current estimates already imply a return to growth, and Chewy shares have historically moved in line with earnings performance.

Historical data shows Chewy's earnings and revenue results correlate closely with stock price movements. The stock price peaked with earnings in 2021 and sold off throughout the subsequent year. From there, even though revenue has continued to rise, earnings have been more volatile.

The 2025 peak for the stock coincided with the earnings peak. Now earnings estimates are sequentially lower, and the stock has followed. If the company's guidance supports current estimates and suggests earnings will reach new highs, shares of Chewy are likely to follow. This would support a higher stock price heading into the June quarter.

Sentiment in Chewy shares stands at a relatively positive 15.6%, suggesting some optimism around the upcoming report. The stock has been testing the $25 level, which represents a critical support zone. A break below this level could open the door to further downside, while a hold could set up for a reversal.

The earnings report carries an expected volatility of 13.0%, with an average historical move of 7.0%. This suggests the market is pricing in a meaningful reaction to the results and guidance.

The setup presents a modestly positive lean heading into the earnings report. The company needs to demonstrate that it can return to a growth trajectory and provide guidance that supports sequential improvement in earnings.

Key support sits at the $25 level. A move back above $31, the previous support that broke in January, would signal a meaningful reversal and suggest the stock has put in a bottom. The upside case depends largely on guidance quality rather than just the fourth quarter beat.

We think Chewy represents an interesting setup for those willing to be patient. The pet industry fundamentals remain solid, and the company's market share gains continue. If management can articulate a path back to stronger growth, the stock could work its way back toward the $30 to $35 range over the coming months.

We are maintaining a modestly net long position in the overall stock market. This positioning reflects our view that the combination of oversold technical conditions, historically favorable sentiment levels, and potential geopolitical deescalation creates a more favorable risk reward profile for buyers than sellers at current levels.

Our equity positioning remains concentrated in themes we believe will drive market performance as focus shifts back from geopolitical concerns. We have not made any changes to our positions during the past week, viewing the recent technical consolidation and volatility as healthy after the strong moves earlier in the year.

For the S&P 500, we think the index presents a bullish opportunity with a 7,000 target and 6,400 stop loss. The recent pullback to 6,500 following geopolitical developments has created what we view as a favorable entry point. Key technical support levels are holding, and momentum indicators are resetting to healthier levels after the decline.

We continue to view geopolitical headlines as temporary factors creating buying opportunities rather than fundamental threats to the equity bull market. The AI Revolution narrative remains intact beneath the surface, and we expect it will reclaim market attention once the immediate crisis passes.

In commodities, we see WTI crude oil as bearish with an $87.00 target and $105.00 stop loss. The fundamental backdrop for energy remains challenged by the potential for deescalation, while the U.S. remains relatively shielded from Middle East supply disruptions. We also view natural gas as bearish with a $2.90 target and $3.40 stop loss, as oversupply conditions and seasonal factors outweigh geopolitical concerns.

Conversely, we maintain a bullish stance on gold with a $5,000 target and $4,300 stop loss. We think the recent technical correction, while severe, has created a healthier setup for the precious metals uptrend. The combination of rising inflation expectations, extreme oversold conditions, and potential Dollar weakness supports our constructive view.

For fixed income, we view the iShares 20+ Year Treasury Bond ETF as bullish with a $93.00 target and $85.00 stop loss. Despite the recent backup in yields following war related developments, we expect the ten year Treasury yield to move back below 4.00% as markets recalibrate rate expectations.

We believe the Fed will ultimately need to maintain a more accommodative stance than current market pricing suggests. The combination of potential deescalation reducing inflation pressures and ongoing labor market softness should support lower yields over the coming months.

Overall, our positioning reflects confidence in the continuation of the equity bull market, supported by improving technical conditions following the recent selloff. We think sentiment has reached levels that historically precede meaningful rallies, and the setup favors buyers who are willing to look past near term geopolitical noise.

We remain focused on maintaining discipline around our targets and stop losses while staying patient for the optimal entry points. The market is presenting opportunities for those willing to act when others are fearful, and we believe the current environment sets up well for the weeks and months ahead.

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^{This report represents analysis and opinion rather than investment advice or recommendations. All views expressed reflect our current thinking and may change as new information becomes available. Past performance does not guarantee future results.}

^{Readers should conduct their own research and consult with qualified financial advisors before making investment decisions. Market conditions can change rapidly, and positions discussed may not be suitable for all investors depending on individual circumstances, risk tolerance, and investment objectives.}

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