We Don’t Need A Pullback

The war in Iran has rebuilt the “wall of worry”, a healthy component of durable bull markets. This wall of worries prevents markets from overheating too quickly. That said, we may already be pushing the limit. It took the S&P 500 only 19 trading sessions to move from oversold to overbought, nearly a third of the 58 sessions required to achieve the same feat following the 2025 Tariff Tantrum.

I have seen a handful of notes suggesting that the speed of this recovery necessitates a pullback to cool stocks. I disagree. Take Nvidia: in 2025, it rallied 110% in just four months. It has since consolidated for nearly 10 months and is currently on the verge of a major breakout. Nvidia cooled off through time, not through price.

As such, it wouldn’t be unreasonable to make the case that the major averages do the same: correcting through consolidation, not price. At the same time, certain segments within the indices remain mispriced for a post-war environment. Although the majors may move sideways, I would expect volatility in the internals, which is where opportunities remain for traders and stock-pickers.

Actually Consensus: Ship Assaulted in the Strait of Hormuz

On Saturday, an oil tanker crossing the Strait of Hormuz was assaulted by Iranian ships. Although this clearly isn’t positive, I doubt market consensus was a linear path to peace. While some will sell the news Monday morning, I view this as a hiccup on that non-linear path to peace, not an event worthy of retesting the lows. Furthermore, as long as CFOs continue to provide constructive commentary on a post-oil-shock economy, we don’t need to worry about meaningful downward revisions to the earnings picture.

Reporting Charts

Monday

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Tuesday

United Healthcare (UNH) | BTO

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Wednesday

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Thursday

Dow Chemical (DOW) | BTO

Intel (INTC) | ATC

Friday

Consumer sentiment (final) | Est: 49.0; Prior: 47.6 | 1000

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