Hey Traders,
I’m wrapping up another wild week in the markets with your Five Star Trader update. We’ve seen quite a bit of increasing volatility as geopolitical tensions flare up and AI hype meets reality checks – but that’s what makes trading different every day, and fun! Let’s break it down and gear up for next week.
Market Overview: Choppy Week with Value Rotation and AI Jitters
The S&P 500 (SPX) ended down 2% on the week, closing at 6,740 after a volatile ride that just barely held the low on the week. The Nasdaq (NDX) fell 1.27% over the last 5 days and is currently still above the 200 SMA on the daily chart, but a big overnight gap could change that quickly. If and when the index falls below that zone on high volume will be the moment when the sell-off will really pick up steam.
We had a big spike in oil prices on Friday, with crude futures closing up 12.67% amid escalating uncertainty in the Middle East, including U.S.-Israeli strikes on Iran and threats to the Strait of Hormuz. That kind of disruption is fueling inflation fears and heightening volatility. This was also combined with a surprise, negative jobs report that comes as fears of AI replacing workers continue to unfold.
Earnings & Volatility
Q4 earnings growth came in strong at around 13% for the S&P 500, marking five straight quarters of double-digit gains, which sounds good, but in reality, the market reaction was much different. Even with those positive reports, many companies still traded lower afterward, showing how skittish market participants are right now.
Typically, we see bullish pre-earnings momentum into January, along with excitement surrounding earnings reports at the beginning of the year. However, this year it simply was not the case. This strikes me as very similar to 2022 when the bear market began. It’s also a good reminder that the actual earnings results versus the reaction are two entirely different things.
Take a look at Microsoft…
Volatility has continued to spike, with the VIX closing at 29.49 today, up 24% in a single day, which can’t be ignored. Today’s move broke just slightly above the October 2025 high, but it is nowhere near the April 2025 high, when we saw the major sell-off in reaction to tariffs.
Surprisingly, though, this did not lead to a panic sell-off at the market close as I had anticipated. Perhaps a delayed reaction is incoming next week.
Look Ahead: Next Week’s Key Events
Next week (March 9-15) brings lighter earnings; however, it still includes a few big names, including Oracle (ORCL) and Adobe (ADBE). The bearish software pattern I wrote about on Wednesday is either going to break or play out after the reports next week.
There is also significant economic data that could cause more volatility. Watch for the February CPI report on Tuesday (March 10th), as inflation sticky above 3% could delay Fed cuts and spark more volatility. Retail sales and producer prices were released on Thursday, offering clues on consumer strength.
