/ March 30 / Weekly Preview
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Monday:
N/A
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Tuesday:
JOLTs Job Openings (6.87M exp.)
CB Consumer Confidence
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Wednesday:
Retail Sales MoM (0.4% exp.)
ISM Manufacturing PMI
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Thursday:
Initial Jobless Claims (212K exp.)
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Friday:
Non Farm Payrolls (55K exp.)
Unemployment Rate (4.4% exp.)
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Monday:
Progress Software Corporation
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Tuesday:
Nike, Inc.
McCormick & Company, Incorporated
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Wednesday:
ICON plc
ConAgra Brands, Inc.
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Thursday:
Acuity Inc.
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Friday:
N/A
No Reasons to Become Bullish (yet)
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Last week, the market went on another roller coaster ride of volatile trading days, ultimately ending in disappointment.
Markets opened the week higher after President Trump’s post on Truth Social said U.S.-Iran talks were “very good and productive” and strikes on Iranian power plants were halted. Brent crude plunged more than 10% in a single session and the S&P 500 rose +1.15% in a relief rally. The optimism proved short-lived: by Wednesday Iran rejected the U.S. ceasefire proposal as “one-sided and unfair,” prompting oil to rebound and climb.
On Thursday the S&P 500 fell -1.7%, its largest single-session drop since the war began, and the market failed to hold the 200‑day moving average on the retest, triggering a broad sell-offs as investors sought liquidity.
Macro conditions worsened: futures markets pushed the probability of a Fed year‑end rate hike above 50% for the first time, Brent topped $110, and inflation fears intensified. The OECD revised its 2026 U.S. inflation forecast sharply higher to 4.2% (versus the Fed’s 2.7%).
Consumer sentiment fell—the University of Michigan’s final March reading dropped to 53.3—and year‑ahead inflation expectations remained pinned at 3.4%, driven largely by a post‑conflict gasoline shock. Overall, a brief relief rally gave way to renewed market stress and rising inflation and policy‑rate concerns.
SPY now nears a -9% drawdown, and, if history is any indication, the near term trend is lower, not higher. After reviewing the technicals, we’ll also briefly discuss the signs we are watching for a bottoming process.
The technical picture continues to deteriorate across all time frames, save for the longest one. The market got rejected at the pivot area (S1 - $654), and the next retracement level stands at $606, some -4% lower.
With no BUY signal yet triggered, stocks fell for the 5’th consecutive week. Short term, the market is oversold enough to elicit a strong rally on any piece of good news. However, we are now firmly inside a SELL signal cluster triggered by our topping breadth backtest. Historically, we would need to see the market come out of this pattern, with the number of technically damaged stocks going well below 400 (currently 494).
Whenever larger drawdown events occured, especially coming from market highs, the number of such stocks eventually reached over 1000. By this metric, we are halfway done with this correction episode.
The absence of a buying regime is signaling that stocks are more prone to volatility and downside than meaningful gains at the moment. We would need a re-activation of this indicator in order to pursue a more risk-on stance going further.
The best times to invest are when correlations are high. Correlations rising across stocks — especially in equities and broad-market ETFs — is a red flag that individual security fundamentals are being ignored in favor of a single, dominant market impulse. High cross-sectional correlation is essentially a quantitative signal that trading is indiscriminate.
Why high correlations often signal buying opportunity:
Indiscriminate selling compresses idiosyncratic dispersion. In normal markets, stock returns reflect firm-specific news, industry cycles, and differing valuation trajectories; correlations are moderate and many opportunities exist to pick winners and avoid losers. When correlations spike, these firm-level differences are overwhelmed by a single directional force (risk-off flows, liquidity shock, margin calls). That means relative value distinctions — cheap vs. expensive, growth vs. value, quality vs. cyclical — are being temporarily muted. Buying when dispersion collapses can capture the re-emergence of fundamentals as markets normalize.
Panic begets broad-market behavior. Correlations tend to rise during episodes of stress because investors rush to exit risky assets indiscriminately. Large-cap ETFs, index futures, and high-beta names often lead the cascade. This creates a market state where price moves are driven more by order flow and liquidity than by revisions to long-term cash flows. Historically, those states mark the trough of sentiment and can be fertile ground for patient, disciplined investors.
The end of panic shows up as already-high correlations. Correlation measures (e.g., rolling 90-day pairwise or principal-component share of variance) often peak during or just after the acute phase of a crisis. By the time correlations are elevated and widely observable, the largest wave of forced selling and liquidity depletion is frequently over. That timing matters: buying into the point when correlations are high captures the transition back to a regime where dispersion and idiosyncratic returns reassert themselves — and where selection and diversification once again add value.
The Enterprise Strategy, due for rebalancing tomorrow, is sitting 33% in cash, which is quite a defensive position. At just 40% of NAV, stocks exposure is conservative.
We would like to see this model commit at least 60% of its allocation to stocks before risking more in our portfolio.
Our Trading Strategy (Sigma Portfolio)
Yes, markets are oversold and any piece of good news —especially as it pertains to oil / inflation — will spur an aggressive rally.
Until further notice, any such rally would be a selling opportunity. The right question to ask now is how defensive one should be in their portfolio. Our view is that the current correction still has room to run, so we will raise cash further, given the right opportunity.
Some important economic catalysts are coming up this week, with a focus on Friday’s NFP print:
Q1 closes, Q2 opens, and a full employment gauntlet all within five sessions, with markets still digesting the Fed’s recent actions.
Tuesday — Pivot day
Conference Board Consumer Confidence (marquee): first full-month read capturing the Iran conflict, tariff widening, and February’s payroll shock. The Expectations component (<80 flagged as recession signal) is the critical watch; a sharp drop would validate stagflation fears.
Chicago PMI and Case-Shiller Home Prices in the morning.
Q1 quarter-close at the bell: elevated volume as pension and mutual funds finalize window dressing and mark positions (estimated ~$62 billion buy-side).
Wednesday — Q2 open, triple data punch
ADP private payrolls: will either stabilize the labor narrative after February’s -92k NFP shock or accelerate the deterioration thesis.
ISM Manufacturing: Prices Paid subindex indicates passthrough of tariff costs; New Orders gauge demand under policy uncertainty.
JOLTS: openings-to-unemployed ratio — a Fed-relevant metric for labor market slack.
Friday — Week anchor
March Nonfarm Payrolls: the decisive print. A rebound above ~100k supports the “transitory weakness” view; a flat or negative print confirms broader labor deterioration and increases pressure on the Fed to act, despite sticky inflation.
ISM Services PMI the same morning to add services-sector inflation context.
As always, we’ll keep you posted with our trading.
Disclosures / Disclaimers: This is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this blog post. I currently do not own or plan to own any position, long or short, in the securities mentioned.
I am not a financial advisor licensed in the United States. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject to change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this blog post.
I undertake no responsibility to update my disclosures and they may therefore be inaccurate thereafter. Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are. All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.
I wrote this blog post myself, and it expresses my own opinions. I do not have a business relationship with any company whose stock is mentioned in this blog post. The information in this blog post is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
The primary purpose of this blog post is to share industry expertise and research and receive feedback (confirmation / refutation) regarding my investment theses.