3 Ways I’m Taking Advantage of the Fog of the Market
Dramatic events create uncertainty but uncertainty creates opportunity for those who stay patient and objective.
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The market reaction to the dramatic events in the Middle East this weekend has been quite modest so far on Monday. Breadth is running around 55% negative but the pullbacks in the senior indexes are mild and the Russell 2000 (IWM) is actually up about 0.2%. The Magnificent Seven ETF (MAGS) has recovered to a small gain after dropping about 1.75% early Monday morning.
Investors are taking the news in stride but it would be a mistake to believe that it is clear sailing from here. The fog of war is a term first used by Prussian military strategist Carl von Clausewitz to describe the uncertainty and confusion that commanders face in the middle of a battle. Information is incomplete, communications break down, plans collide with reality, and the situation on the ground changes faster than anyone can process it. Decisions that looked clear in the planning room become enormously difficult when the shooting starts.
The same dynamic applies to trading when dramatic events hit. As Mike Tyson put it, everyone has a plan until they get punched in the face.
We have taken some punches lately. But if we regroup and maintain our objectivity there are good opportunities in this messy action.
Nvidia Bounces Off Its 200-Day Moving Average
I previously mentioned that I was looking to sell Nvidia (NVDA) into strength on its earnings report. I did sell the position and the stock traded sharply lower subsequently. I rebuilt a position early Monday morning when the stock was in the red and it is now up about 2% after hitting its 200-day simple moving average almost perfectly.
One reason I made the move is that Morgan Stanley replaced Micron (MU) with Nvidia as its top semiconductor pick. Nvidia shares have been essentially flat for the last two quarters while the business has continued to strengthen. Morgan Stanley attributes the stagnation to concerns around the durability of Nvidia's current growth rate and sees those concerns shifting. The stock is now trading at around 18 times 2027 estimated earnings, which the firm calls a surprisingly good entry point. Morgan Stanley keeps an Overweight rating with a $260 price target.
I view NVDA as a conservative place to park some cash at current levels and plan to add to the position as it develops.
Xeris Delivers a Stellar Quarter
At the other end of the spectrum are a couple of small-cap names I have discussed several times. Xeris Biopharma (XERS) has been under pressure recently on a number of concerns but it produced a stellar earnings report Monday morning. Some short-term traders are taking profits into the spike but this is a genuinely strong report and my confidence in the stock is higher than ever.
Xeris beat on revenue, tripled the EPS estimate, guided 2026 4% above consensus, swung from a $55 million net loss to profitability in a single year, and confirmed that XP-8121 Phase 3 with a potential $1 billion market is on track. Every product line grew. Recorlev doubled. The company is now self-funding.
The company meets with analysts in about a week and I expect reaffirmation of buy ratings and increased price targets. I already have a large position and will continue to trade around it and build it.
ADMA Gets a Catalyst
The other small name I highlighted last week is ADMA Biologics (ADMA) . As I noted then, the stock offered compelling value but the market wasn't interested. On Monday it is up 7% after gaining 2.5% on Friday.
What changed is that the company announced a $200 million share buyback agreement with JPMorgan (JPM) . The CEO stated that ADMA's common stock represents the most compelling near-term capital deployment opportunity available to the company. When management puts that kind of money behind that kind of statement it is worth paying attention to.
Staying Patient in the Fog
The fog of war may have punched us in the face but there are real opportunities in this market for those willing to look for them. Don't expect things to quickly fly higher. The great values will eventually be recognized but the process takes time.
In the three cases above, valuation will provide support while market volatility will continue to create entry points. Stay patient and move incrementally.
At the time of publication, Rev Shark was long NVDA, XERS and ADMA.
