Markets Break 5-Week Losing Streak - Market Outlook (Ep. 25)

So this week was only a four-day trading, Monday March 30 to Thursday April 2, due to the Good Friday holiday.  The stock market was heavily driven by geopolitical tensions in the Middle East, with oil prices surging above $100 and driving volatility.  We saw big gains early in the week followed by a tumultuous Wednesday night trading session due to the Trump's speech, where we saw those early week gains fade.  But markets rebounded late Thursday on potential diplomatic resolutions regarding navigation in the Strait of Hormuz.  With Thursday seeing a sharp decline followed by a rebound to positive territory, that may suggest a desire among traders to avoid weekend risk exposure amid the rising conflict.  I know I tend to flatten out a bit when we have these three-day holidays.  I don't like having a ton of risk over the long weekend, because a lot can happen.  All it takes is one tweet!

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Transcript

SPEAKER_00 0:10

Welcome to this week's edition of Market Outlook. I'm 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? Do note that this week was a short week. We only had a four-day trading week, Monday, March 30th to Thursday, April 2nd, and that was due to the Good Friday holiday. So the market was closed all day Friday in observance of Good Friday. So the stock market this week was heavily driven by geopolitical tensions in the Middle East with oil prices surging above $100 a barrel. That drove volatility, right? Right now, if you're looking to get a good measure of volatility, just check out what the CL futures are doing, right? Typically you would check out VIX, right? VIX tells you what's going on in the market as far as the volatility. But right now, it's all about oil. If oil is up, there's a lot of volatility in the market right now. If oil's having a down day, volatility is contracting. We saw big gains earlier in the week, followed by a tumultuous Wednesday night trading session due to Trump's speech, where we saw those early week gains fade away as Trump began to speak. But the markets actually rebounded late on Thursday, the last trading day of this week. And the reason the markets had that rebound is there was some potential diplomatic resolutions that could be in the works regarding navigation in the Strait of Hermuz. This week we saw our five-week losing streak in the SP 500. We finally broke that. We actually had a positive week this week in the market. And we also saw some differences as far as sector rotation. Some of the sectors that have been badly beaten up as we have gone down have been, of course, the tech sector. But we saw the tech sector, people started rotating back into the tech sector and out of some of those defensive sectors they were in. We saw big declines in the energy sector this week as people started shifting away from a lot of those oil-related names and getting back into tech-related names. And I mentioned we had a pretty wild market on Wednesday night into Thursday. Well, with Thursday seeing a sharp decline, followed by that big rebound back into positive territory. That may suggest a desire among some traders to avoid risk exposure over the long weekend, right? We have a holiday weekend. And I know for myself, I tend to flatten out a bit when we have these three-day holidays. I don't like having a ton of risk on over these long weekends because a lot can happen. All it takes is one tweet. On Tuesday this past week, that was March 31st, and that marks the official end of Q1. So the market wrapped up the first quarter. How did it wrap that up? Well, with a lot of volatility, and a lot of that was due to a 25% increase in job cuts in March. Also, crypto continued its decline with companies like Coinbase and MicroStrategy down over 15% for the quarter. All in all, Q1 was a pretty nasty quarter. This was not a great quarter for most of us as far as our trading and our PLs. I know I'm down for 2026, and yeah, I've got some work to do to get back into positive territory for the year. But I think the market, at some point, obviously, the bleeding will stop, and we may have gotten there already because despite the volatility that's still in this market, the market has showed signs that it wants to go up because we just broke that five-week losing streak. The major indexes, including the SP 500 and the NASDAQ, managed to rebound from losses earlier in the week, right? It looked like the market really wanted to tank overnight into Wednesday and into Thursday morning, but the Bulls stepped in and really pushed us back up. And for me, that's a positive sign that the Bulls are so strong. It's like every time the Bears want to push this thing down, you know, they just can't quite get it, right? They just can't quite take full control of this market. And I do see that again as a positive sign. So let's jump into the charts and see what the major indices did last week. Let's start with the SP 500 index, the SPX. So the SPX finished the week up 3.4%. And we're going to take a look at the close of the previous Friday to the close of Thursday this week because that was the last trading day. So a shortened week, but in that time frame, the SP 500 was up around 213 points. That is an increase of about 3.4%, not to be outdone. The NDX, which is the Nasdaq 100 ETF, saw a gain in that time span of around 3.9%. That's a 912-point gain in the NDX, a very strong week. And a lot of that has to do with the fact that the NASDAQ is very tech heavy and the tech sector was especially strong this week. Moving over to the RUT, the RUT, which is the Russell 2000 index, it also had a nice week. It finished the week up 3.3% on the week. And then finally, let's take a look at DJX, which is the Dow Jones Index. This finished the week up exactly 3%. And this was the weakest of the major indices up 3% for the week. So just a very, very strong week. Now, if you were trading this four-day week, uh you experienced a little bit of heartache and pain at times, right? This was not an easy week to trade because you know, taking a look, well, let's go back to the SPX. You know, we had uh some very rocky times early in the week. Monday was a big down day, and then we rallied hard. Tuesday we were up huge. Wednesday we gapped up and then really didn't go anywhere from that. And then Thursday morning, we sold off in a huge way and then rallied. So it was a lot of two-sided action. But after all the dust settles, you know, we're still up, you know, nearly 3.5% in the SPX. And if I actually switch over to the weekly chart here, right now I'm looking at daily candles, but if we take a look at weekly candles, you can see we had five red candles in a row, so five down weeks in a row. And then this week we finally got that green candle. So we snapped that five-week losing streak. Let's take a look at what the major market sectors did this week. Let's start with the weakest sector, because we did have one sector that did finish negative on the week. It had a pretty nasty week, actually, and that was XLE, the energy sector ETF. You can see Monday, Tuesday, Wednesday, and Thursday were all red candles. XLE finished the week down 5.3% on the week. And why was it down? Well, because most of the week oil was down, uh, oil was uh coming down in price, and that hurt XLE. Oil did rise significantly in price on Friday, so it did cause XLE actually to uh to have some good two-sided action on Friday, but it still wasn't able to finish positive on the day, and it certainly wasn't able to finish positive for the week. One other major sector that did not have a great week, XLP, which is consumer staples. Consumer staples tends to outperform when the market is doing bad. And this week the market was actually up a lot. So consumer staples actually underperformed. It actually finished the week pretty much exactly unchanged, right? So it wasn't a down week, but wasn't an up week. And when the market was up, well the major indices were all up anywhere from three to four percent on the week, and the fact that this didn't have a positive week at all. This is a very underperforming kind of week for consumer staples. All the other major sectors finished positive for the week, nicely positive for the week. Let's move over to XLY, which is consumer discretionary. So it typically acts the opposite of consumer staples. When the market's doing good, this tends to outperform. And consumer discretionary finished the week up about 2.3% on the week. If we move over to XLK, which is really the story this week. XLK is the tech sector ETF. We take a look at the close of the previous Friday to the close of Thursday this week. We can see XLK was up a little more than $6. That is almost a 5% move. That's like a 4.7% gain in the tech sector. Moving over to XLC, which is the communications sector, this is also very tech related. So it also includes companies like Meta and Google in it. So this sector also had a very nice week, up 4.4%. XLRE, which is the real estate sector, ETF, this particular sector had a very good week. This finished the week up around 4% on the week. So very strong for real estate, which if I zoom out, you can see real estate had been in free fall for about a month or so. Moving over to XLF, which is the financials, we have a gain on the week of about 3.6%. And we're getting close, by the way, to the new earnings season. We're gonna get some banks reporting earnings here in the next week or two. You know, a lot of the major banks will report. And you can see the financial sector has been badly beaten up really since the start of 2026, since the first of the year, that was the high, and then it's stair-stepped down ever since. It's gonna be interesting to see what happens in the financial sector as some of these major banks like JP Morgan and Citigroup Bank of America, uh Goldman Sachs, all of that stuff, when they begin to report earnings, if they have good earnings, maybe this sector will finally turn around. Let's take a look at XLB, which is the materials sector ETF, and see what it did on the week. This had a nice up week. It was up around 3.1% on the week. XLI, which is the industrial sector, also had a nice week up around 3%. XRT, let me find that here in my watch list. XRT was up around 2.4%. So retail was actually pretty resilient this week as well. XLV, which is healthcare, and let the chart load. You can see healthcare for the last month has been in free fall. Of course, the market has been very weak for five weeks straight, but healthcare pretty much went with the market. It went straight down for about five weeks, but this week it found a floor and actually had a 2.5% increase on the week. XLU, which is the utilities sector. Utilities is a little bit more of a defensive kind of sector, so you can see that it didn't have the big down move that some of the other sectors did as the market was melting down over the last five weeks. It was pretty resilient, uh, but this week it was only up about 1.6% because again, that's more of a defensive sector, and now people are rotating out of things like uh energy or utilities, and they're getting into more risky kind of plays like tech. Now let's also take a look at a couple of industry ETFs here. I want to take a look at XBI, which is the biotech sector, which if I zoom out for the last year, you can see this thing has been up and to the right. Biotech has been one of the best performing industries in the market. And this past week, it looks like XBI finished the week up around 7.8%. Well, this is a monster move from the close of last Friday to the close of Thursday this week. It had a really strong four-day performance. And then finally, let's take a look at the home builder industry ETF. So XHB. Now, home builders has been very badly beaten up. This thing has been a total waterfall. It began waterfalling over early in February and it's just been straight down, right? And it's just heading straight to the floor. But this week it looks like it found a floor and has uh actually finished positive on the week, finished up around 1.8%. Let's move over to some of the megacap tech stocks. Let's start with the only one of the big mag 7 type stocks that actually finished negative on the week. Tesla finished the week down very slightly, but it finished the week down 0.3%. But on a week where the rest of the tech sector was very, very strong. Uh, this is not a good sign for Tesla. If you look out at the chart, if you zoom out, you can see we have been in a clear bearish signal for this for a while as far as EMAs and the crossovers here. It has just been a stair step down for about three straight months now in Tesla. The rest of the tech sector, the the big names were very, very strong. Let's start with the biggest performer as far as the one that made the biggest gain. Uh, Meta was up 9.3% on the week, moving over to Google, which had a nice week. Google finished the week up 7.8%. AMD, let's take a look at what some of the semiconductors did. AMD was up 7.7% on the week. Not to be outdone. Nvidia also had a nice week up nearly 6%. AVGO, which is Broadcom, had a nice week. It finished the week up 4.6% on the week. Amazon. Amazon finished the week up 5.2%. Just really big moves in all these big megacap tech stocks. Coinbase, uh Coinbase actually finished the week up uh 6.4% on the week. Coinbase has been in free fall for several months because of crypto kind of melting down, but it looks like it found a floor a few weeks back. And hopefully, once crypto starts creeping back up, maybe Coinbase will come back up as well. Microsoft, which has been badly beaten up in recent months, Microsoft had a nice week, up 4.7% on the week. Netflix, which has also been underperforming here lately, but Netflix had a nice week here, up 5.6%. And finally, Palantir. Palantir had a 3.8% increase in the week. And the only other Mag 7 stock I didn't mention, Apple. Apple actually underperformed a little bit. It was up about 2.9% on the week. But considering, you know, many of these stocks were up 5, 6, 7% on the week, the fact that Apple was only up 2.9%, I think it underperformed a little bit. Moving over to some of the futures and commodities, let's take a look at USO, which is, of course, crude oil. Uh basically is an ETF version of the CL futures. And you can see this was not pretty, you know, crude oil making new highs here. If I actually take a look at the CL contract, the crude oil futures, the CLK6 contract, just to get some um better candles as far as the overnight sessions. You can see we were trading near the uh all-time highs as far as uh for the last few weeks here in CL. We got very close to that high that CL made at the start of the war on Thursday this week. So that spooked the market a little bit, but still the market managed to finish positive on Thursday despite that huge rise in CL, which for me, I didn't quite understand it, but hey, you know, I'll take it. Overall, though, uh USO finished the week up 11%. That is a gigantic increase in crude oil. UNG, which is the natural gas ETF, netty gas finished the week down about 7.6%. So pretty big uh decrease in netty gas. So a little bit of a divergence between oil and netty gas. Moving over to crypto, let's take a look at ETHA, which is the Ethereum ETF. And this actually finished the week up 4.1%, and then iBit, which is the Bitcoin ETF, finished the week up about 1.5%. And on the strength of crypto, that helped crypto-related names like uh Coinbase finish positive on the week, as well as other uh stocks like Strategy that are very heavily tied to crypto markets. Let's take a look at the metals. GLD, which is gold. Gold had a really good week. Gold finished the week up 3.5%. SLV, which is the silver ETF, finished the week up uh very similar, uh finished the week up 3.7 percent on the week. Moving over to the currencies, let's take a look at UUP, which is the dollar index ETF. This actually finished the week uh basically unchanged, right? It just really didn't go anywhere up uh around 0.1%, so up very slightly. And because the dollar didn't move, I doubt the euro, the pound, or the yen did much this week, but let's take a look at them just to verify that. Yeah, FXC, which is the euro, finished the week up 0.1%, so kind of a nothing move. FXB, which is the British pound, uh, finished the week down about 0.3 percent. And FXY, which is the Japanese yen ETF, finished the week up 0.3%. So yeah, overall, uh not much really going on in the currencies. Moving over to bonds, let's take a look at TLT, which is the 20-year bond ETF. Give me just a second, I actually typed the wrong ticker. There it is, TLT. So this is the 20-plus year Treasury ETF. You can think of this as a proxy for something like the ZB futures. And this had a positive week. It was up 1.7% on the week. So a little bit of a strength in the bonds, but the bonds have been very weak since the war started. The very first day the war started, you can see this high that the bonds made, and then they went down every day since the war started, but at least on this shortened holiday week, and they found a little bit of a floor. They found some resilience here. So let's talk about earnings for this week. So the next earnings cycle really kicks off not this next week, but the week after. So this week we're still in this kind of dead area where you almost have no companies worth talking about that are still left to report. We have nothing worth talking about on Monday this week, nothing worth talking about on Tuesday. Uh, Tuesday after the bill, Levi Strauss report earnings. It's not a very liquid stock. You can't trade options on it really. Just don't worry about that. Wednesday before the bill, we do have a real company reporting, Delta Airlines, which is very tradable. I might do something with Delta. Wednesday after the bill, we have Applied Digital and Constellation brands. Those have decent option markets. You could trade those Thursday before the bill, nothing really. Um Blackberry reports. It's not a tradable stock as far as options. Thursday after the bill, you have WDFC, that's the uh WD40 company. Uh, I've never traded that. I don't know if it has good options markets or not. I seriously doubt it, though, because it's not something that ever really comes up in my watch list. And then Friday, both before and after the bill, nothing reports worth talking about. So let's talk about some trades for this week. What am I looking at for this week? Well, because everything really has good IV right now, especially the metals. The metals have had big down weeks. They've had this week big up weeks. We've got good volatility in gold and silver. And this week, what I did in GLD, I've already got this trade on, but if you don't have this trade on, let me go ahead and load up the options table here. Give me just a second. What I did is I did a call butterfly. So I'm expecting both gold and silver to start drifting higher. I they just have that feel. And what I ended up doing is I did a 15 point wide butterfly. So I went and sold the 16 Delta call, and then I bought $15 wide wings on each side. And let me double up the short. So we're playing for a nice little move up here. And if I go into the curve and analysis, let me turn on the analysis mode here inside Tasty Trade. This is our call butterfly. So right now GLD is trading down here. And if in the next two weeks we drift into the butterfly, I stand the chance to make, well, the max profit on the trade is 1317. And that happens if I pin the two short strikes, the 460 calls here. If I pin those exactly at expiration, I make 1317. Now that's an extremely unlikely event. As a matter of fact, it's an impossible event because I'm not going to hold this to expiration. Because if I'm inside the spread, I face an exercise or assignment situation. I don't want shares. So I'll get out at least a few minutes before close on that Friday. You know, I won't let it expire in the money. So I'll get out a little early. But still, if I'm hovering somewhere near the center of the butterfly, I very easily could make $600, $800,000 a thousand dollars on this butterfly spread if I'm very close to the center on that Friday two weeks from now. So I really like these butterflies as kind of low probability but high reward plays, especially on gold and silver right now, because I think they're going up. Long term, they're gonna go up. Now, whether they go up in the next two weeks, I don't know, but I have that kind of intuition. So that's the way I want to play them. Another thing I want to take a look at is SMH, which is the semiconductor ETF. Let me uh close out the analysis view and go into the chart. Let's take a look at what the semiconductors have been doing lately. Because with the weakness in the market, you would think semiconductors probably got beaten up badly, but no, they actually held up well, right? If you think about, you know, the last five weeks, the market's been going down in a serious way, but SMH actually was able to uh stay afloat quite nicely. And uh IV rank right now is 39 in the semiconductor ETF. That's good IV. I like the idea of selling some premium here. So what I would want to do is I would want to possibly sell an iron condor. I'll go to the May cycle, 42 DTE, as I'm recording this, and I would go and let's sell a put credit spread here. So I'll go to the 20 delta put and then buy the put $5 below. We'll do a $5 wide iron condor, and that gives me 82 cents. That's a really nice credit. I wanted somewhere around 60 to 70 cents. I got 82 cents. That's a little more than I needed, but that's fine. And let's go to the call side. And the call side, I'd like to get about 70 cents. I'll go to the 15 delta call to buy the call, $5 above. Wow, the calls are trading. Really expensive the call spreads. So I could actually go out a little further here because that gave me almost a dollar. Let's go to the 15 Delta call and then buy the call $5 above. It still gives me almost 80 cents on that. This is a really nicely priced iron condor. 157 credit versus a 343 max loss because $5 wide wings, $5 minus the $157 credit is the $343 max loss. Probability on the trade, the pop is 62%. The P50 number 72%. For me, all signs point to go on that trade. And then finally, one thing I want to show you guys, and this is something that's not an options trade. This would be something you would load up on shares. So eventually, this market that's been stair stepping down, it will find a bottom. And a lot of times after these uh lengthy kind of declines, you know, you get a decline of several weeks or several months, the market will find a bottom and it will start rebounding higher, right? It will go back up. And sometimes, especially uh those first few weeks, once it finds a bottom, it'll go up in a significant way. It'll go up quickly. And once you think that the bottom is in, you have to consider maybe loading up on some leveraged ETF kind of plays. So if I'm taking a look at QQQ, right now my EMA ribbon here is still in a bearish signal, but you can see the lines, at least because of this last week, starting to bend back upwards. They're not crossing yet, but once the this EMA ribbon begins to start crossing back up into a bullish signal, a play I'm probably going to jump into because it's something I have done in the past, is load up on some shares of TQQQ, especially to ride the wave back up, because that's one of the best ways to quickly recover some of the losses that I suffered on the way down is to leverage that move back up. So TQQQ, that's the triple levered QQQ. This is a risky play. Uh, don't do this unless you're prepared for you know some big losses along the way, because just because you think the market's about to rebound doesn't necessarily mean it has to. So play this with money you don't mind losing, but this is a great way to leverage that up move when we finally think the bottom is in. I don't know if the bottom is in just yet, so I'm holding off. I'm waiting for that EMA ribbon to really uh come back and clearly signal that we're back in a bullish trend. So that's it for this week's edition of Market Outlook. If you're listening to the audio version of the podcast on Apple or Spotify, please give the show a five-star rating. Help us grow in the algorithms. For those of you watching the video portion of the podcast on YouTube, please like, subscribe, share. Also, read the YouTube description. You'll find a link to my book, The Super Wheel Option Strategy. This book is about one of my favorite option strategies, the wheel option strategy. This book is published on Amazon. Again, you'll find a link in the description below. Also, consider becoming a premium member by signing up to the DT Options Patreon slash Discord. When you become a Patreon member, you get access to the DT Options Discord where I hold a live voice chat every single trading day. 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