The Market Enters Correction Territory - Market Outlook (Ep. 23)

For the week of Monday, March 16, to Friday, March 20, 2026, the stock market was heavily driven by the ongoing geopolitical conflict in the Middle East, fluctuating oil prices, and rising bond yields, which pushed major indices toward a fourth consecutive week of losses.  Despite a brief rally on Monday, markets sank for the rest of the week, with the S&P 500 hitting its lowest close of 2026 on Friday.  The Russell 2000 has not fallen into correction territory.  Technology stocks fell as investors rotated away from growth and cyclical risks, leading to a down week for the Nasdaq.  The market was dominated by fears that the conflict involving Iran would keep interest rates higher for longer and disrupt global energy supplies.

Transcript

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Welcome to this week's edition of Market Outlook. I am your host, Derek Taylor, also known as DT. Market Outlook is a weekly podcast where I take a look at last week in the market as well as previewing the week ahead. I will also share with you some potential options trades that I think are interesting for this week. But first, what were the major stories in the stock market this past week? This past week, the stock market was heavily driven by the ongoing geopolitical conflict in the Middle East, fluctuating oil prices, rising bond yields, which pushed the major indices toward a fourth consecutive week of losses. And despite a brief rally on Monday this past week, markets sank for the rest of the week, with SP 500 hitting its lowest close of 2026 on Friday. The Russell 2000 has now fallen into correction territory. If you're not familiar with that term, a correction, a market correction is when you fall 10% from your high. So the Russell has uh already gotten into that market correction territory, but the SP 500 and the NASDAQ are really not far off from being in correction territory themselves. We saw technology stocks fall as investors continue to rotate away from growth and cyclical risk. And of course, that led to a downweek in the NASDAQ, which is very tech heavy. The market mainly was dominated by this fear that the conflict involving Iran is going to keep interest rates higher for longer. It's going to disrupt global energy supply. Oil prices remain volatile, they remain elevated throughout the week. And all of this still fuels this inflation fear that has been really pervasive in the market for the last three, four years now, but it's really starting to worry people, right? Remember 2022, the bear market year of 2022. Mostly that was dominated by inflation risk, right? And I think we're starting to see some of that here in 2026. Some of the market data that was released this week reinforced fears of sticky inflation. We saw uh the PCE report in January, it remains high. We saw a revision of the GDP, the Q4 2025 GDP. That was revised down significantly to 0.7%. That indicates a slower than expected economic pace entering the new year. And some of the earnings from this past week also weren't great, right? We saw Ulta Beauty, it plummeted after earnings. Micron, despite reporting great earnings, dropped a bit as well. So, and the micron earnings, the reason for that drop is probably over fears of its spending predictions. In summary, this past week was very much like the previous several weeks. It was defined by elevated volatility and a risk-off environment. So let's jump into some charts and take a look at what the major indices did last week. Let's start with the SP 500 index, and of course, that is the SPX. If we take a look at the close of the previous Friday, we closed at 6632, two Fridays ago, and this past Friday we closed at 6505. That's a drop of about 125 points. That is just under a 2% decline. That's about a 1.9% decline in the SP 500. That's a pretty ugly week, right? That's uh especially Wednesday, Thursday, even though it is a green candle on here. It's a gap down green candle. And then Friday, we had a really nasty sell-off kind of late in the day before rallying, just before close. At one point, the SP 500 was down 120, 130 points on the day, and then rallied to only being down about 70 points on the day. Uh, Friday was extremely volatile. If we take a look at the Nasdaq 100 on a percentage basis, it was down a very similar amount. It was down 2% on the week. It had a move down of about uh 482 points. So it really was not just tech selling off because the NASDAQ, of course, is very tech heavy, but the SP 500 was down 2%. Uh the small caps, which are not really all that tech heavy, they were also down nearly 2%. They were down actually 1.7% on the week. If we look at the close from the previous Friday to the close of this past Friday, which we're missing a candle here if you're watching the video portion of the podcast, there's actually a glitch on the rut. The R U T, the Russell 2000 index, it's not showing me Friday's candle because I know Friday's candle was not a green candle, it's a big red candle. Let me switch over to the ETF of the Russell 2000 IWM, uh, and we get a much better representation. You can see week over week was was pretty ugly. We're actually down uh 41 points in the rut. That is a 1.7% decline. And then if we move over to the Dow Jones and take a look at DJX, this is the Dow index. Uh, this is a really nasty chart as well. If we look close of the previous Friday to the close of this past Friday, that is a move down of about 2.1%, all very similar, all four of those major market indices down basically at 2%. So it was uh a broad market sell-off. And then finally, the volatility index. What did VIX do this past week? And this looks like another glitch on the chart because uh the Friday VIX candle should definitely be a green candle, right? And not a red candle. We're actually, yeah, we've got the March 19th candle, the Thursday candle, but it's missing uh the next candle on the chart. But I can tell you that VIX finished the week trading at 26.78, and that is a move up of about 41 cents. That's a one and a half percent gain uh in VIX over the week uh from the close of the previous Friday to where it closed this past Friday. Now, volatility, despite being up, it was up the previous week. I mean, we've been in this Iran conflict now, uh going on about three weeks now. So volatility has remained elevated. Right now, we're trading uh in VIX, you know, just under 27, but that's kind of the range we've been in. We've been in this 24 to 30 kind of range. Uh we pushed as high as 35 and change at one point, but that was you know a very brief period. It's been basically from 24 to 30, is kind of where VIX has been hovering. I think that's where we're going to stay as long as this conflict and especially this disruption in the oil supply continues. Now let's take a look at some of the major market sectors. Which ones outperformed, which ones underperformed? Well, on a week where all of the major market indices were down 2%, just a really, really nasty week, there's not a lot of sectors to talk about that had a positive week. Really, there's one that really had a good week, and that of course is energy. It makes sense. The surging oil and gas prices, energy has been on a tear. And not just the past couple of weeks, really since the first of the year, since January 1st, XLE, the energy ETF here, this thing has been nothing but up and to the right. If you have been in a very bullish trade, if you've been very long energy in energy-related stocks, the oil companies like Exxon and Chevron, or some of the sector ETFs like XLE, you have made a killing this year if you're long energy. And you're about the only ones that are making any money because most of us are losing money this year because of the market being down, and because other assets like gold and uh silver and Bitcoin, like so many things are beaten up, bonds are beaten up right now. Energy is about the only thing that uh has worked out well since the beginning of this year. On the week, XLE finished the week up about 2.8%. If we look at the close of the previous Friday to the close of this past Friday, so a really good week, uh, being up nearly 3%, with the overall market being down 2% on the week. That's uh a pretty incredible week there. The only other major sector that had a positive week, if we take a look at XLF, the financial sector, uh, if we take a look at the close of the previous Friday to the close of this past Friday, it finished the week up very slightly, about 0.4% on the week. And uh, you know, that's a win with the overall market being down 2%. If you finish even just a little bit higher, right? That's an incredible week for the financial sector as well. Everything else had a negative week. Let's start with tech, because I think that's the one that most of us focus on. Tech actually was not down as much as most of the other sectors. Tech actually was one of the best performing sectors this past week. We take a look at close of the previous Friday to close of this last Friday. That's only a move down of about 1%. Again, it kind of outperformed because there were several sectors that had ugly, ugly weeks, and not one ugly, ugly, ugly weeks, right? Two uglies, like XLU down five percent on the week. For those watching the video portion of the podcast this week, it was five red candles, including just a gigantic red candle on Friday. I mean, the utility sector took a complete and total dump on Friday. And this is, you know, sometimes this sector can be a defensive kind of sector where when people are scared, they'll go, you know, invest a little bit in utilities. So kind of surprised at that huge sell-off there in utilities. XLB, the material sector, had an ugly, ugly week, right? A too ugly week. So XLB finished the week down 4.5% if we take a look at the close of the previous Friday to the close of this past Friday. Consumer staples, and you would expect consumer staples to actually do better than most other sectors when the market is doing bad. Uh, that's typically the way it works. Consumer staples is kind of a defensive sector where consumer discretionary is, you know, people doing more uh risk-on kind of trading. Well, but that's not the case. Consumer staples down 4.1% on the week. And I mentioned consumer discretionary, which you would think would do worse. It actually did better. Consumer discretionary was down only 2.8% on the week. XLRE, the real estate sector, had a really nasty week, down 3.9% on the week, a very similar kind of sector, uh, more of an industry within the sector. Home builders, XHB was down. XHB was down about 4.2% on the week. If we take a look at XLV, healthcare, down 3% on the week. XLI, the industrial sector, another kind of defensive sector. You would think this would uh perform better than most. And it had a down week of about 1.8%. That's not a great week. I mean, the overall market was down about 2%, and that's what the industrials were. So there was just really nowhere to hide this past week. XRT, the retail sector, uh down 1.7% on the week. XLC, the communications sector, down 1.9% on the week. Finally, XBI, the biotech industry here. Uh biotech down 1.2% on the week. Uh so uh yeah, there was just ugliness across the market outside of energy. Like when you do a stock scanning of any kind for for uh especially on Friday, I was checking for stocks moving up because there was not a lot of stocks that actually had positive days this past Friday because of that huge down move. But there were actually several. They were all in the energy sector, right? And again, I think right now, uh, if you're looking for a place to get long, energy is about the only thing that makes sense right now. Let's take a look at what some of the big mega cap kind of stocks did. Let's start, let's start with some of the big semiconductor stocks because this was an interesting week for some of these. Let's take a look at AMD, because AMD is an anomaly. If we take a look at the close of the previous Friday to the close of this past Friday, it actually finished up 4.1% on the week. That's a move of about eight bucks. So AMD definitely outperforming the rest of the tech sector because if you look at its compadre here, NVIDIA, similar kind of company, right? Both of them semiconductors. Uh, NVIDIA had the exact opposite week. It finished down 4.2% on the week. Sticking with semiconductors, let's take a look at AVGO, which is Broadcom, finished the week down 3.6% on the week. If we move over to some of the other AI-related kind of stocks, Meta, which has been in free fall for a little bit now. Meta had a really bad week, down 3.2% on the week. Microsoft also finished red on the week, down 3.5% on the week. Netflix had a nasty week. You can see a couple of weeks ago, you know, had a bit of good news and had a nice little pop, but it's been trending lower really the last couple of weeks, with the overall market trending lower as well. But Netflix had a decline of 3.7% this week. And Tesla, Tesla had a pretty nasty week, uh, especially on Thursday and Friday. If you're looking at the chart here, you can see the close of the previous Friday to the close of this past Friday. Tesla finished down a little more than 23 points in that one week time period. That is a move down of about 6%. For a tech company that did actually have a positive week, we already mentioned AMD, but Coinbase also finished positive. Uh, if we take a look at the close of the previous Friday to the close of this past Friday, it finished up around$2. That is a 1% up move in Coinbase. Of course, it's very heavily tied to what's going on with Bitcoin and Ethereum. And both of those cryptocurrencies seem to be pretty stable right now. Uh they've kind of stopped the bleeding that had been going on for several months in crypto. Apple finished the week down about 0.9%. Amazon finished the week down about 1.1% on the week. Google finished the week down about half a percent, you know, very small decline in Google on the week. And then Palantir finished the week down very slightly, uh, maybe 0.2%. Uh pretty strong week actually for Palantir, considering the overall weakness in the uh the tech sector, uh, and especially the overall weakness in the market. Let's move over to some of the futures and the commodities. Let's first take a look at oil. I'm going to take a look at the CL futures here. If we take a look at CL, obviously this thing exploded here in the last three weeks because of what's going on in the Middle East, but you can see the CLK6 contract trading at just under$100 a barrel, trading at$98.09. And this is, you know, it was not a terribly crazy week in oil. Considering what happened the two weeks before, it looks like we kind of found a range here, right? We found a ceiling, and this is where it wants to trade. It wants to trade around this$90 to$100 level, right? I think that's where it wants to sit for now. Uh, this past week we saw a move up of about 1.3% in oil. If we take a look at the close of the previous Friday to the close of this past Friday, pretty normal kind of week, actually, considering everything that is going on. I know that's crazy to say UNG, which is the uh natural gas ETF here. UNG finished the week down 2% on the week. I know that's a little weird with what's going on in the Middle East that uh natural gas is not actually rising, but hey, that is the case right now. Although some of the natural gas-related companies in the energy sector, they're doing very well right now. If we take a look at crypto, this is also a sector that really didn't get beaten up. We take a look at ETHA, which is the Ethereum ETF. We take a look at the close of the previous Friday to the close of this past Friday, Ethereum finished up 1.3% on the week. And slightly differently is uh iBit, the Bitcoin ETF, because iBit in that same time period, we had a decline of about 1.1%. So it's uh basically the same move in opposite directions, a little bit of a divergence there between Ethereum and Bitcoin. Now let's move over to the metals. The metals were basically crashing last week. Uh and a lot of us have exposure to this, so you know, this is one that's probably hurting most of us. SLV, the silver ETF. This finished the week down 15.4%. And yeah, I you can see I'm holding some shares. I'm also in a strangle as well. Yeah, I this is uh this is obviously a badly beaten up position that I'm in right now. If we take a look at GLD, which is the gold ETF, GLD also, its chart looks like death, right? Gold finished the week down 10.3%. So 15% down move in silver, 10% down move in gold in one week. Uh that is a massive move in gold. Uh, by the way, gold is usually not at like that as far as that vol kind of volatility. Now, for those wanting to scoop up some assets, is it now the time to go and buy some gold or silver? I don't know, right? I I really don't know if this down move is over. Now, long term, you know, I I think these assets go up, but I I don't know if I want to load up on them right now. Now I'm already in a position, so I'm kind of stuck, but if I wasn't already in a position, I don't know if now is the time to jump in because you don't want to jump in and then the crash down continues, and then you end up being in a position that you're stuck with for several months or in some cases several years for it to recover. So I would hold off before jumping into the metals right now. Let's move over to the dollar. I'm gonna take a look at UUP, which is the dollar index ETF. The dollar finished the week down 0.8% on the week, and with a weak dollar, that means that the euro was strong. So let's take a look at FXE, which is the Euro ETF, and this finished the week up about 1.2% on the week. FXB, which is the British pound ETF. This also finished the week up about 1%, and finally FXY, which is the Japanese yen, it finished the week up very small, up uh about 0.2% on the week. And looking at bonds, rounding out things, let's take a look at TLT, which is the 20-plus year Treasury bond ETF. This finished the week down about 0.8%. If I actually take a look at the proper uh bond futures, the ZB, uh, you can see the last three weeks or so, uh, we've gone from a high of around 119.04 in ZB all the way now to trading at 112.20. That is a serious decline there in the bonds. Let's talk about earnings for this week. And this will be a short discussion because there's nothing interesting reporting earnings this week. We're in kind of this uh dead area of the earnings cycle where there's just no interesting uh companies reporting. On Monday, both before and after the bill, nothing you need to worry about is reporting earnings. Tuesday, both before and after the bill, nothing you need to worry about. Wednesday before the bill, Chewy reports and PDD, which is Pendu Duo, the Chinese company. Penduo Duo is actually pretty tradable. So if you want something that has decent option markets, if you want to play it for earnings, PDD is tradable. Chewy is mediocre at best. Wednesday after the bill, you have Beyond Meat. That thing's not worth trading. I that thing I believe is trading sub$1, like it's a penny stock now. So I only mention it is just because that was like a big meme stock at one point, right? Everybody was trading beyond meat because that was the future. You know, all of this uh basically veggie meat that they were trying to sell to the public, and it just never really caught on. Thursday, both before and after the bill, nothing you need to worry about, it's reporting earnings. Friday before the bill, Carnival Cruise Lines, CCL, which is a real company and does have good options markets. So if you're looking for option plays, Wednesday before the bill, PDD, Friday before the bill, CCL. And that's about it. So let's talk about some possible trade ideas for the week. One thing I want to look at, let's take a look at GDX, the gold miners ETF. And because of what's going on with the miners, uh, you know, I think this is interesting because the gold miners have fallen off a cliff. This thing was trading at 116 and change just a couple of weeks ago, and now it's trading at$80. Right. Just that is a serious haircut. What would you want to do in this? Well, I think, you know, I think there's a at least a reasonable chance that gold and thus the gold miners will quickly rebound. I think this move largely is driven by news, some of the geopolitical risk, uh inflation news, that kind of stuff. And I think sometimes this stuff, these kind of sell-offs are a little overblown when they move too far too fast, and you'll get a little bit of a rebound. So what I'm thinking about is maybe a call ratio spread, which I'm already in one, but you know, you guys, if you're not in one, I would go 55 days, and what I did is I went and bought the 100 call and sold the 105 call. That is a$5 wide call debit spread that you're only paying 38 cents for. And because it's$5 wide, that means 38 cents. From$5.$462 is the max profit on this way out of the money call debit spread. But it's not way, way out of the money. I mean, the long call there is only a 17 delta, right? It's not like it's impossible that this thing can't profit. And then you just double up the short call so that overall you get a credit. In this case, you get a 65 cent credit. That means if we never rise in GDX to 100, you're going to get 65 cents. So if it goes lower, you get 65 cents. If it goes up but not enough, you get 65 cents. But if it goes up into the spread, you have an extra$5 of potential profit. So your max profit is$565 because of the$5 called debit spread component of this trade. If I move over to the curve and analysis tool here inside Tasty Trade and do the example trade here and make sure to turn on the theoretical analysis here, or actually let me turn on the expiration analysis. That way you guys can see the risk profile here at expiration. So if GDX never goes up, no harm, no foul. If it does go up, which is what we're betting, you know, we want to get close to this spread late in the option cycle. We don't want it to go way above the spread because we do have one naked short call that could get hurt. But this is a risk worth taking because you're so far out of the money. I don't think you can just you're not going to get run over. But here's the thing, because you really want to make some of this max profit kind of potential here. You want, you actually want to be tested a little bit on the call side. You just don't want it to get there tomorrow. You want it over the next two months to slowly drift up, and this thing will start showing a nice profit, especially if you're in this in the last week or two of the trade and you're hovering somewhere around this spread. You know, you probably make, you know, a buck or two on the trade. And if you're in it very late and you're inside this tent area, you could potentially make three, four, maybe five hundred dollars. You probably don't want to hold to expiration because there is assignment risk if you're inside this spread. So don't hold all the way to expiration. Get out, you know, before expiration on that Friday. You can hold it all day that day, but at 15 minutes before market close at expiration, get out of it, just to avoid any potential assignment risk. Another interesting trade idea for this week, just because it's so badly beaten up. We already took a look at what the Russell did. We took a look at R U T, the uh Russell index. Here is RTY, the Russell Futures, which because of the extra leverage that the futures give you, I kind of like doing something in the RTY versus the R U T. Uh, you know, the Russell is the weakest index. It's the one that just entered market correction territory, so it's already off by 10%. And I think that move, at least in the short term, is going to continue. So what I'm thinking about is maybe a butterfly spread. So when I'm thinking maybe do uh for this Friday, just go and buy the 36 delta put, sell the 29 delta put twice, and then buy the 23 delta put below. So you've got 25 point wings on this put butterfly, and you pay 170. The multiplier in RTY is 50, not 100. So you're actually not paying 170, you're paying half of 170, you're paying 85 cents for this butterfly. And you have the potential to make 1165 because of the 50 multiplier, it's really not like a 25-point uh wing, it's more of a 12.5 point wing. 12.5 from 85, right? 1165 is the max profit. And this is a really interesting trade because you have the potential here to make a lot of money on a very cheap trade, right? It's a low probability trade, only a pop of 14%. But you pay$85. And if we get a pretty nasty week next week, you know, it doesn't have to be like a huge down week, but if we get a down week in the Russell, you're going to make a little money. If we get a good down week, you have that max profit area of around$1,100,$1,165 here at the center. And that's if you pin these two short strikes exactly at expiration. And I wouldn't hold this to expiration because again, there's assignment risk, because if you're inside the spread, you could get assigned on one of these short options or exercised on one of the long options. You could end up with a longer, short contract of RTY that you probably don't want to hold. So get out. I mean, hold till Friday. You can hold late on Friday. But if you're inside the spread, you know, at least 15, 30 minutes before market close, get out of the trade. And if you're somewhere near the center of this spread, especially, you're gonna make a nice chunk of change. One last thing I want to talk about is let's do a stock. Let's do XOM, Exxon Mobil. If we take a look at the chart, obviously, energy and all the oil companies, straight up and to the right. It's it's to the moon, right? And I think that's going to continue. I think because of what's going on in the Middle East, this thing is not done yet. So with Exxon Mobil, I want to be bullish. So what I think I want to do is I want to go to the 55-day cycle and I want to sell. Well, let's check out the 17 Delta put. I get a 234 credit on a buying power reduction of$1,400. I'm$20 out of the money on this put, right? Very high probability trade, 83% pop, a P50 number of 91%, and I always manage my short options trades at 50% max profit. So really high probability trade, decent risk reward, right? Only putting up$1,400 of buying power for the chance to get$234 there of credit. If you wanted to bump that up a little bit, the 22 Delta put gives you nearly$3 credit on a buying power reduction of$1,700. The pop goes down just a little bit, pop of 77%, P50 of 88%. But I like either one of those puts. I think those are reasonably safe trades on a real company, ExxonMobil. Like if the stock for whatever reason did all of a sudden reverse and tank on you, do you mind taking shares of ExxonMobil, maybe running the wheel on it? And of course, you'll have to make that decision yourself if you actually want to buy shares should the put go against you. If you don't want the shares, though, you just have to defend this trade in some way. Start rolling it, start selling calls against it, whatever it happens to be. But most of the time, you're not going to have to worry about that. If you sell the 17 Delta put, you know, probably three quarters of the time the trade will never see any serious pressure. And then one quarter of the time, you may face some a little bit of heat, right? But I don't think, I don't think you're going to wake up one day and ExxonMobil go from$160 a share to$100 a share. You know, these kinds of oil companies, they don't typically have that kind of volatility. So for me, I think that is a perfectly acceptable trade as far as the risk you have to take, as far as that low buying power requirement versus that very juicy credit. So that's it for this week's edition of Market Outlook. For those of you that are listening to the podcast on Apple or Spotify, please give this podcast a five-star rating. Help us grow in the algorithms. For those of you watching on YouTube, like, subscribe, share. Also, check out my book, The Super Wheel Option Strategy. This book is available on Amazon if it's about one of my favorite option strategies, the wheel option strategy. This book, you'll find a link to it in the description below. All right, guys. Peace.