Welcome to another week of 7AM Research. As we navigate through unprecedented market conditions, we believe several critical questions demand our attention: Can equity markets sustain their momentum while oil prices surge past $110? How will the ongoing Iran War reshape energy markets and broader economic conditions? What signals are sentiment indicators providing about potential market direction?

This week proved remarkable for its contradictions. Despite geopolitical tensions escalating and oil reaching levels not seen in nearly four years, equity markets posted their strongest weekly gains in months. We think this resilience reveals something important about current market psychology and the forces driving asset prices.

The March employment report delivered surprises that challenge prevailing narratives about economic weakening. Meanwhile, technical indicators are flashing signals that historically have preceded significant market moves. This week, we examine these dynamics in detail, explore what they mean for the weeks ahead, and identify opportunities we believe merit attention as earnings season approaches.

The S&P 500 closed the week 3.36% higher at 6,583, delivering a sharp rebound that caught many market participants by surprise. We believe this strength demonstrates the market's ability to look past near-term headline risk and focus on underlying fundamentals that continue to support higher asset prices.

The week began with speculation building around President Trump's Wednesday evening address to the nation regarding the Iran War. Market participants anticipated potential de-escalation, sending oil prices back below $100 per barrel and equities sharply higher in early trading. Just hours before the speech, Iran's President Pezeshkian released an open letter stating Iran harbors no enmity toward other nations, including America and Europe.

However, Trump's speech failed to deliver the de-escalation markets hoped for. The president stated the US will hit Iran extremely hard over the next two to three weeks, attributing oil price increases to Iranian terror attacks against commercial tankers. This immediately sent oil above $110 per barrel and briefly pressured equities lower. Yet dip buyers stepped in aggressively on Friday, demonstrating the market environment remains highly conducive to buying weakness.

From a technical perspective, we think the price action is particularly encouraging. The S&P 500 fell to a fresh low of 6,317 on March 30th before staging a sharp reversal. The index broke above downward trending channel resistance at 6,450 on March 31st, while also crossing below the daily bottom Bollinger Band at 6,362. This came with the first reading below 30 in the daily RSI since April 2025, a technical condition that historically has marked significant turning points.

Since that reversal, price action has been strong, rising into 6,600 on April 2nd. We expect the market will now test the top end of channel resistance at 6,650. We believe a short squeeze is likely once that level breaks, even as the Iran War continues and oil prices push toward recent highs. The reality is that the Iran War will probably persist for at least another two to three weeks, but the drivers of US equity markets, which are the large cap technology stocks, continue to accelerate their growth in the background.

On Friday, the US Labor Department reported that the economy added 178,000 jobs in March, crushing expectations of 65,000. The unemployment rate fell to 4.3%, below expectations of 4.4%. We think these figures demonstrate continued labor market resilience despite mounting concerns about economic weakening.

However, the details reveal a more nuanced picture. US job growth in February was revised down from an initially reported loss of 92,000 jobs to a total loss of 133,000 jobs. This marks the biggest monthly US job loss since December 2020. We believe this pattern of initial strength followed by downward revisions is becoming increasingly common and suggests the labor market may be weaker than headline numbers indicate.

The mixed results will probably have minimal net change on Fed policy expectations, if not a slightly accommodative shift. Initially reported numbers are becoming far less reliable, and the following revisions consistently move in the downward direction. We think this is further evidence of a weakening labor market that could set up for more supportive Fed policy than markets currently anticipate.

We believe market sentiment indicators are providing important signals about potential direction in the weeks ahead. The equity-only put/call ratio reversed lower after a recent increase, a pattern that historically has been followed by near-term upside more often than not.

When the 20-day average put/call ratio sits above 0.65, as it does currently, the S&P 500 has been higher one month later by an average of 1.24% and was positive 68.0% of the time. However, after a significant two-month increase in the put/call ratio followed by a one-week pullback, the S&P 500 has been higher by 1.9% and was positive 74.7% of the time.

Overall market sentiment stands at 51.6%, down 17.6% from three months ago just before earnings season began. We think this combination of reduced sentiment following a sharp decline provides a statistical edge to the upside. When sentiment criteria matched current conditions in the past, the S&P 500 was higher one month later 83.2% of the time by an average of 3.5%.

After forming a long, rounded top above the 6,550 line for the S&P 500, last week's price action took the index back above this horizontal line. While it needs more strength to signal a move to new highs, we believe this line holding as support suggests a failed breakdown. Adding to this, we saw improving breadth with strengthening money flows into the market.

We think the technical setup for equities appears constructive following last week's sharp reversal. The S&P 500 broke above the bottom end of downward trending channel resistance, suggesting the recent decline may have marked an important low. The combination of oversold conditions, improving sentiment indicators, and strong breadth creates what we believe is a favorable environment for further gains.

Market participants are constantly anticipating announcements from President Trump either ending or winding down the war, which has led to an environment highly conducive to dip buying. We expect the equity market will remain resilient even as the Iran War continues and oil prices push back toward recent highs. The next key checkpoint is the top end of channel resistance at 6,650, which we believe will be broken in the coming week.

Fundamentally speaking, we continue to think the market will remain resilient and asset prices will head higher once the chaos winds down. The drivers of US equity markets, which are the large cap technology stocks, continue to accelerate their growth. Macroeconomic data that correlates more closely with earnings has pushed to new highs even as stock prices have fallen of late, suggesting potential for strong earnings in coming weeks.

Earnings season approaches with important implications for market direction. We think market sentiment plays a key role in how stocks behave ahead of earnings and react to results. When overall market sentiment is below 58.3%, buying any stock one week ahead of earnings and holding until one week after has averaged a gain of 2.38% with a 54.6% success rate.

At current sentiment levels between 50% and 53%, we believe stocks should average a gain of 3.20% during the two weeks around their earnings release. Earnings season really starts on April 14th when major banks begin reporting. Goldman Sachs reports on April 13th, followed by JPMorgan Chase and other large banks on April 14th.

We expect the yield curve environment to create headwinds for financial stocks. Interest rates across the curve have increased, with significant increases in the 2-year and 3-year yields. Meanwhile, the yield curve has flattened. When the 10-year yield increased over the previous three months but the yield curve flattened, bank stocks averaged a gain of just 0.13% around earnings and lost money 51.8% of the time.

However, there are still positives for banks. Regulations are expected to ease, which will free up capital for lending and share buybacks. The consumer remains resilient, credit quality is stable, and there has been a favorable trading environment. We think a lot of weakness has already been priced in, with sentiment below levels seen following recent market disruptions.

WTI crude closed the week 11.95% higher at $112.05, posting the highest daily close since June 2022. We believe oil prices will remain elevated as the Iran War continues, though attempts to break significantly higher will likely be capped or limited by US efforts to tame the market.

President Trump's Wednesday speech failed to calm markets after he said the US will hit Iran extremely hard over the next two to three weeks. Trump added that the war will not last long and that discussions with Tehran are ongoing. Trump attributed the increase in oil prices to the Iranian regime launching terror attacks against commercial oil tankers and neighboring countries that have nothing to do with the conflict.

The two sides have frequently contradicted each other's claims about the existence and status of peace deal talks since the war started. Trump has also sent conflicting signals, reportedly saying negotiations were close to producing a peace deal, but the US was also prepared to escalate fighting by sending thousands of troops to the region.

We think the story for the oil market remains fairly consistent: Iran's primary form of leverage over the US is pressure through capital markets, and that will remain the case going forward. This means that US attempts to lower oil prices will quickly be refuted by Iran, but significant breakouts in oil prices will likely be capped or limited by US attempts to tame the market.

Oil prices were finally beginning to calm heading into April 1st, dropping below $100 per barrel and forming a downtrend in the daily RSI that rejected resistance around 70 in late March. However, following Trump's speech, we saw a surge and close above $112.00, while the daily RSI broke above downtrend resistance around 65.

Meanwhile, the daily top Bollinger Band has been crossed at $108.58, while the daily bottom Bollinger Band has shifted up to $82.40. Clearly, there were a significant number of mixed signals and high headline risk into the three-day weekend.

Natural gas prices ended the week 7.59% lower at $2.80, even as global natural gas and oil prices surged sharply as the Iran War entered its second month. We think the situation in US natural gas markets remains entirely isolated from the global backdrop. The latest EIA storage report showed supply is building faster than normal for this time of year, with inventories running 5.2% above last year and 3.0% above the five-year average.

Weakness has been largely driven by mounting supply while weather continues to lean bearish. The latest forecasts are offering no relief either, with above-average temperatures across the Eastern half of the US through early April expected to reduce late-season heating demand.

Gold prices closed the week 3.26% higher at $4,680 per ounce, even as the US Dollar Index extended its rally above 100.00 and the S&P 500 continued to trade with extreme volatility. We believe it has become increasingly clear that the recent decline in gold prices was driven by large central bank sales rather than a shift in the broader narrative.

The Turkish central bank's gold reserves dropped by 69.1 metric tons to 702.5 tons last week, bringing the fall in the last two weeks to more than 118 tons as authorities seek to blunt market fallout from the war. In Asia, gold traded at a premium in India for the first time in two months as softer prices boosted demand.

While rate cuts are being priced out, we think the reason for such a shift is the increase in underlying inflation expectations, perhaps one of the most bullish drivers for gold. As the US Dollar Index remains near overbought territory, a reversal in the indicator would only further support gold prices.

Gold prices have maintained a strong technical trend since bottoming on March 23rd at $4,100. This came with the first drop below 30 in the daily RSI since October 2023 and a cross below the daily bottom Bollinger Band which traded at $4,568 at the time. We think these oversold conditions created an excellent entry point for renewed upside.

Since then, price action has reclaimed the key $4,500 support level but rejected the bottom end of upward trending channel resistance at $4,800, as well as resistance around 50 in the daily RSI. We believe both of these levels are set to be retested as soon as this week, and that retest should result in a break to the upside, opening a move into $5,000.

The fundamental backdrop for gold is strongly bullish right now. Central bank demand continues at historically elevated levels, geopolitical tensions persist globally, and real interest rates remain in negative territory despite recent nominal rate increases. Additionally, ongoing uncertainties about economic data and fiscal policy traditionally support gold as a safe-haven asset.

The recent strength in the US Dollar, while creating near-term pressure on gold prices, appears unsustainable from a technical perspective. The Dollar Index has reached overbought conditions and crossed above its daily top Bollinger Band. Without sufficient fundamental support for a sustained Dollar rally, we expect this strength to prove temporary, removing a key headwind for gold.

We believe Aehr Test Systems represents an interesting trading opportunity ahead of its Tuesday, April 7th earnings release at 4:05 PM ET. The stock currently trades around $50, attempting a break above 2023 highs. Consensus expectations call for a loss of $0.08 per share on revenue of $12.90 million for the third quarter of fiscal 2026.

Aehr Test Systems has undergone a significant transformation in recent months, moving away from its historical focus on EV and Solar applications toward providing test and burn-in services for AI processors. This strategic shift has unlocked substantial new market opportunities with major technology companies.

In early February, the company announced it had secured an initial production purchase order from its lead production customer for package-level burn-in of a next-generation AI processor. This customer is likely Amazon for its Trainium2 processor. A couple of weeks later, they announced another order from what is most likely Nvidia for its lead AI processor customer.

Subsequently, the company announced a new order for wafer-level test and burn-in of silicon photonics integrated circuits, speculated to be from Broadcom. Then just last week, Aehr announced an order from a new customer for testing of data center networking and optical I/O applications, likely Cisco.

These announcements demonstrate Aehr has secured orders from Amazon, Nvidia, Broadcom, and Cisco, all of which are months or quarters away from hitting revenue. We think this validates the company's position in a rapidly growing market. The CEO noted that a single processor for some of these large customers at wafer-level burn-in requires 20 to 30 systems at $4 million to $5 million each.

The company suggested that AI spend in test between test and burn-in could be $8 billion to $15 billion, representing a really large addressable market. Management has consistently heard bigger numbers from customers than what the market expects, suggesting potential for upside to consensus estimates.

While these orders will mean little for third quarter results or fourth quarter guidance, we believe they suggest upside to the consensus revenue estimate for 2027 of $82 million. More importantly, they indicate still more orders are likely down the road, making Aehr a stock that should likely be held for the longer term.

The stock has more than doubled since its January earnings release, rallying from around $20 to current levels near $50. This represents a better than 300% increase since July when the stock traded with a $12 handle. We think the rally demonstrates strong market conviction in the AI testing opportunity.

After announcing orders from major customers, the near-term catalysts are likely already known. With the stock more than doubling during the quarter, we believe this creates an interesting trading setup. The stock has gapped higher 27 times on earnings by an average of 6.5%, but a month later it was lower 67% of the time by an average of 6.8%.

For those looking to establish or add to positions, we think any weakness this quarter should be bought for longer-term holders. However, for traders, it may be time to start taking some profits, particularly on strength following the results. The combination of known catalysts already announced and the stock's recent performance suggests near-term upside may be limited compared to the potential for a pullback.

Buying levels: Consider accumulating on any weakness toward $45. Selling levels: Consider taking partial profits on strength above $55.

We maintain a net long position in the overall stock market. We believe the combination of improving technical indicators, supportive sentiment conditions, and resilient fundamentals supports further upside in major indices despite ongoing geopolitical uncertainties.

Our current equity holdings consist of a long position in Aehr Test Systems. We think this position reflects our conviction in the sustainability of AI infrastructure spending and positions us to benefit from the multi-year capital expenditure cycle in data center equipment and testing.

We have not made any changes to this position during the past week. The recent rally in the stock, while substantial, appears healthy after the strong announcements of customer orders. We expect any near-term weakness to create opportunities to add to the position rather than a signal to reduce exposure, provided that the fundamental opportunity remains intact based on continued developments with major customers.

For the S&P 500, we are maintaining a bullish stance with a target of 6,800 and a stop-loss at 6,400. We believe the recent pullback and subsequent break above the downward trending channel created a favorable entry point, with key technical support levels holding and momentum indicators resetting to healthier levels.

We think geopolitical headlines related to the Iran War represent noise and temporary buying opportunities rather than fundamental threats to the equity bull market. The market is constantly anticipating announcements from President Trump that could signal an end or winding down of the conflict, creating an environment conducive to dip buying.

Overall, our positioning reflects confidence in the continuation of equity market strength, supported by what we believe are constructive fundamentals, accommodative sentiment conditions, and favorable technical setup following recent consolidation. We remain focused on opportunities in companies benefiting from structural growth trends while maintaining tactical flexibility to capitalize on what we think are favorable risk-reward opportunities as they emerge.

We want to hear from you. Hit reply and tell us:

What's your biggest investment challenge right now?

In what other ways can we help you?

Whether it's timing entries, managing risk, or identifying the next major opportunity—we read every response and use your feedback to make our research even more valuable.

Here's to your financial success,

Sincerely,

7AM Team

^{IMPORTANT DISCLAIMER}

^{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.}

^{The information provided is believed to be accurate but is not guaranteed. We do not warrant the completeness or timeliness of information presented. Investing involves risk including possible loss of principal. There is no assurance that any investment strategy will achieve its objectives.}