A Market Struggling to Withstand Too Many Headwinds
Hopeful investors trying to catch some good news provide some support but they are losing confidence.
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We May Be Rallying But This Market's Headwinds Have Not Gone Away
Brent crude oil is hovering around $105 on Monday morning as markets open with a slight bounce. Investors are hopeful that President Trump's weekend push to build an international naval coalition to escort ships through the Strait of Hormuz will produce some positive progress.
Trump called on China, France, Japan, South Korea, and the U.K. to send warships to the region, but as of Monday morning not a single country has made a firm commitment. Iran's response to the proposal was blunt: "Let him send his ships." The Energy Secretary acknowledged over the weekend that gas prices are likely to stay elevated for at least a few more weeks. That is not a timeline that is producing optimism.
Meanwhile the shipping situation continues to deteriorate. Commercial vessel traffic through the Strait fell to zero on March 14, the first full day of the conflict with no confirmed crossings in either direction. Roughly 400 vessels are holding position in the Gulf of Oman rather than committing to long alternative routes, suggesting shipping operators still expect the corridor to reopen but are not willing to bet on when. Iran has selectively allowed a handful of vessels from non-allied nations such as Turkey and India to pass through, which tells you this is as much a political tool as a military one.
Multiple Headwinds, Not Just One
The Iran and oil situation would be enough on its own to cause market problems but it is not the only problem.
Adobe (ADBE) is the latest major software name to come under AI-related pressure. The stock fell sharply after CEO Shantanu Narayen, who has led the company for 18 years, announced plans to step down. That leadership transition landed on top of an already difficult year, with ADBE down roughly 19% year to date on fears that generative AI tools will erode its creative software dominance.
The broader software sector has been re-rated lower as investors worry that AI efficiency reduces the number of user seats companies need, directly threatening the subscription revenue model that has powered this group for years. Adobe is a specific example of a broader concern that is weighing on the entire category.
Private credit is adding another layer of stress. Liquidity issues in that market are putting pressure on the financial sector broadly, with the Financial Select Sector ETF (XLF) trading at its lowest level since May 2025. Banks are struggling as the combination of oil-driven inflation concerns and private credit stress creates a difficult operating environment.
The Fed on Wednesday
The next Federal Reserve interest-rate decision is Wednesday and there is no realistic chance of a rate cut at this point. The inflationary pressure from energy alone makes that impossible to justify. What will matter is the policy statement and Chair Jerome Powell's press conference. The market will be listening closely for how the Fed characterizes the uncertainty created by Iran, oil, and the AI sector reassessment.
The pre-war inflation data was already mixed at best. The post-war data has not been fully captured yet, which means the Fed is essentially navigating with incomplete information. Powell is likely to reflect a high degree of caution and the statement will probably acknowledge risks on both sides without committing to a direction. That is not a catalyst for a rally.
Technical Picture
The technical situation has deteriorated meaningfully. With the S&P 500 falling below its March 9 low, IBD has moved its recommended exposure down to the 0% to 20% range and is advising investors to reduce exposure by selling their weakest performing positions.
The Innovator IBD 50 ETF (FFTY) , which tracks leading growth stocks, fell 3.3% on Friday and closed below its 200-day simple moving average. When the growth leadership index breaks its 200-day, it indicates that aggressive growth investors are capitulating. Bounces that follow that kind of action tend to fail more often than they hold. V-shaped bounces should not be trusted.
The Military Picture
According to the Institute for the Study of War, the conflict is currently in a phase where the military trajectory is relatively positive. U.S. forces are steadily degrading Iran's ability to deploy drones and missiles, and while Iran continues to fire both, the overall attack rate is slowly decreasing. There has been no operationally significant damage to U.S. forces and no widespread casualties.
The progress is steady but the time frame for achieving full military objectives remains uncertain. That last point is the one that matters for markets.
Game Plan
This remains a market where patience and preparation are the right posture. The approach has not changed. Manage positions carefully and do not let drawdowns build. The primary work right now is building a watch list of quality stocks that can be acted on quickly when technical conditions improve. IBD offered similar advice over the weekend: prepare for the next uptrend by identifying stocks showing relative strength while everything else is under pressure.
Those are exactly the names worth focusing on. Stocks that are holding key support levels while the broader market remains under pressure tend to be the ones that outperform when conditions finally turn. That is the list worth building right now.
Strap on your trading helmet. It is going to be a bumpy ride.
Related: Managing Drawdowns Is the Key to Keeping Your Account Near Highs
At the time of publication, Rev Shark had no positions in any securities mentioned.
