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Monday felt good.
Dow up 900 points.
Oil dropping 9%.
The market finally catching a breath after five brutal weeks.
And then Tuesday showed up.
What's Actually Happening
The positive sentiment from Monday's Trump Truth Social post is evaporating fast.
Iran's foreign ministry denied any direct negotiations with the US are taking place.
Oil is back above $103 for Brent.
WTI back above $91.
The Dow is barely clinging to green.
$QQQ ( ▼ 0.76% ) is red.
And the 10-year Treasury yield just hit its highest level since July 2025.
Monday was a relief rally built on a single social media post.
Tuesday is reality checking back in.
The Most Alarming Quote Of The Week
BP's chief economist said something at an industry conference this morning that everyone needs to hear.
He called this oil shock incomparable to any disruption in the past.
His exact words, there's been no disruption of this scale.
The Strait of Hormuz closure is choking off 15 to 16 million barrels of oil per day from global markets.
And here is the part that should stop you cold.
The country with the capacity to bring new production online quickly is on the wrong side of Hormuz.
He was referring to Saudi Arabia.
Meaning, the fastest possible supply response to this crisis is geographically blocked by the very crisis causing it.
A 30 to 40% rise in oil prices, which is exactly where we are right now, could cut a full 1% of global economic growth.
That is not a rounding error.
That is a significant global slowdown.
Citi Sees $150 Oil
If you thought the oil story was close to over, Citi published a note this morning that will change your mind.
Their analysts say markets need to get comfortable with oil above $100.
Their base case: Brent rallies to at least $120 over the coming month.
Their bull case: $150 per barrel.
The scenario that gets us there according to Citi is simple.
Neither military action nor diplomacy solves the Strait of Hormuz situation.
And the damage to regional energy infrastructure prolongs the crisis into the middle of the year or beyond.
Given that Iran is still attacking Gulf neighbors today, that scenario is not theoretical.
Software Stocks Got Hit Hard Today
Away from oil, something interesting happened in tech this morning.
Anthropic announced a new AI capability that allows Claude to control your computer and complete tasks autonomously.
Software stocks immediately sold off.
The software ETF $IGV ( ▲ 0.95% ) dropped 3.5%.
$PLTR ( ▼ 3.85% ) down 5%.
$CRM ( ▲ 3.19% ) down 4%.
$ORCL ( ▼ 0.62% ) , $PANW ( ▲ 4.99% ) , $SNOW ( ▲ 0.57% ) , $SHOP ( ▼ 0.07% ) all under pressure.
The AI disruption fear trade is very much alive.
The market is asking a simple question.
If AI can do the work of software, what happens to software company valuations?
Nobody has a clean answer yet.
And uncertainty gets sold.
The Bright Spot Nobody Is Talking About
$TSLA ( ▼ 1.81% ) European sales rose 11.8% in February after months of declines.
Small data point.
But worth noting that consumer demand for EVs in Europe is recovering even as the broader market struggles.
Sometimes the best opportunities hide in the stories that do not make the front page.
What This Week Is Teaching Us
Here is the pattern of this entire month in one paragraph.
Bad news drives markets down.
One hopeful headline drives a sharp relief rally.
Reality catches up within 24 to 48 hours.
Markets fade back toward the lows.
Repeat.
This is a market that wants to recover but cannot find a legitimate reason to sustain one.
And until the Strait of Hormuz reopens, or credible peace talks begin, that pattern is likely to continue.
What Disciplined Investors Do In This Environment
They do not chase Monday's rally.
They do not panic sell on Tuesday's fade.
They stay systematic.
They find quality oversold setups.
They sell puts at prices they already want to own.
They collect elevated premium while volatility stays high.
They reinvest distributions from SCHD, JEPI, and JEPQ.
And they let the process do what the process does.
This market is noisy.
Your strategy does not have to be.
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This newsletter is for educational purposes only and is not financial advice. Options trading involves substantial risk of loss and is not suitable for all investors. Most traders lose money. Always conduct your own research and consult a qualified financial professional before making any investment decisions.
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