Market Bottom Approaching? What Experts See in Geopolitical Turmoil

Summary

Despite scary headlines about US involvement in a conflict, markets are surprisingly resilient, suggesting the makings of a bottom. Experts point to indicators like the VIX spiking over 40 and then retracing, or gold selling off while stocks turn green on bad news, as signs of a bottoming market. While oil prices spiked on Strait of Hormuz concerns, analysts believe disruptions will be minimal, and the US government likely wants to avoid high oil prices before the midterms. The AI trade, with stocks like Microsoft and Nvidia showing strength, is also seen as a leadership sign, with these tech giants offering fundamental strength even with global trade disruptions. Historically, geopolitical conflicts are often short-term negative catalysts, and after clarity, de-risking tends to reverse. Technical signals like a VIX curve inversion and energy stocks failing to rally with oil, alongside market internals showing software leading, indicate we are in the later innings of a sell-off. While no stock is immune, historical precedents show that periods of war have sometimes been good for the US economy. Investors are advised to be patient, cautious, and hold some cash, as opportunities are emerging in leadership areas like software and megacap tech.