Sam Badawi
Stock Analyst, Creator of Origins of Alpha & Quarterly Conviction
The Nasdaq 100 may be nearing a breakout after about three months of sideways chop since the tech drawdown, as fears of further war escalation and $100-plus oil fade. Semiconductors are showing relative strength. Risk remains after Trump rejected Iran's proposal to reopen the Strait of Hormuz within seven days, per the WSJ, but ugly weekends have often reversed on a sudden deal, sending oil lower and stocks higher, so positioning heavily around that narrative is risky. x.com
QQQ's bullish case rests on Trump's failure to follow through on bombing Iran, which points to an offramp rather than escalation. A Gulf bombing would set off the biggest mutually assured destruction standoff since 1962, with every refinery hit or day the Gulf stays shut hurting the world economy and Trump's midterms. Iran's missile and drone capacity has set a new equilibrium over the strait, and escalation could bring $200 oil and the same stalemate, so the offramp is his best position. x.com
The Nasdaq 100 is following the expected scenario almost on schedule, but whether a dump comes after it breaks above all-time highs depends on what Iran and Trump do. If the Strait of Hormuz is secured, a dump before the midterms is off the table. x.com
The Nasdaq 100's bounce back near all-time highs on Iran deal hopes gave bulls a false sense of safety, and it is now back at the April levels it belonged at on a risk-weighted basis after ceasefire claims proved false. A 30% rise in 32 trading days on "Iran wants a deal" was never normal enough to hold. x.com x.com
Crude oil's biggest bullish catalyst has disappeared with the prospect of the Strait of Hormuz reopening. Per The Kobeissi Letter, President Trump said he cancelled a US attack on Iran and that the perimeters of a deal, including a total reopening of the strait, have been agreed. x.com
The Iran war, rising oil prices and inflationary pressure do not yet look severe enough to trigger a major economic crisis. Despite some deterioration in the macro picture and short-term volatility, the broader picture remains relatively healthy and the long-term outlook for US large-cap and Nasdaq 100 stocks is very positive. x.com
The Nasdaq 100 looks ready for a gap down, leaving trimming with trailing stops or sitting on the sidelines as the only way to survive. x.com
Oil will come down significantly, because Trump will eventually make a deal with Iran and put the conflict to bed. x.com
Shorting the Nasdaq-100 looks unwise here. The McClellan Oscillator is at levels not seen since the tariff lows, yet with oil and yields surging the index sits inches from all-time highs. Good news on top of PCE, such as from Micron or the jobs report, could push it higher. x.com
The Nasdaq-100 looks set for a roughly 7% drop over the next month and a half, driven by expected election turmoil. The 10-year Treasury yield is at 5.2% and the dollar index at 101, and the setup rhymes with October 2018. The main risk is a flip higher from here or a move 3% above the previous all-time high; a short-term rip before the decline is possible amid month-end flows. x.com x.com x.com x.com
The Nasdaq closed at an all-time high, showing that selling after the war began was a mistake. Stocks keep rising throughout Trump's term, and in the end only those who hold assets win. x.com
