Fog of Uncertainty Keeps Investors Frozen
With no resolution in sight and oil at a three-year high, patience remains the only viable strategy.
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2-27-25-uncertainty
Investors were hopeful to start the day on Friday but it didn't last long as it became increasingly clear that the war with Iran will not be resolved quickly. President Trump stated that Iranians face a "big hurdle" to overthrowing the current regime and made clear that resolution will probably take some time.
Adding to the pressure, the U.S. is deploying 2,200 Marines and three amphibious warships from Japan to the Middle East. That may be to protect U.S. assets, but troops on the ground is not a favorable market development.
Oil moved higher again and is hitting a three-year high, which is pressuring bonds with increasing worries about inflationary consequences.
Retail Is Pulling Back
There are still some hopeful investors trying to time a market low, but they need positive news and there are no signs of it developing.
JPMorgan (JPM) noted that for the first time this year, retail investors are showing persistent signs of weakness. Weekly stock purchases dropped 30% and ETF inflows fell 22%.
The Technical Picture Keeps Eroding
Breadth was only 37% positive and the Nasdaq closed below its 200-day simple moving average for the first time since May. That is the second lowest close after November 20 since September 2025.
The Magnificent Seven (MAGS) were the big losers again, with the ETF dropping 1.5% to its lowest close since August 2025.
Game Plan
I could continue at length about the many negatives, but there is no mystery about what is happening. Investors don't know what is going to happen in Iran or with oil and the fog of uncertainty is keeping them on the sidelines. They are not only not buying but increasingly selling as disgust with the market continues to build.
The good news is that when positive developments finally arrive, the rally is likely to be fast and furious. The problem is that it may not happen for weeks. My advice remains the same: stay patient, protect capital, and work on those shopping lists.
The game plan is to be ready when good news finally does hit. Don't get sucked into trying to guess when that might be.
Have a great weekend. I'll see you on Monday.
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At the time of publication, Rev Shark had no positions in any securities mentioned.
