It was a steady session yesterday, but there was still a lot of confusion over Iran headlines. It's clear the market wants it to be over, as is evident, but the resolve has been there since last Monday.

I was surprised to see Consumer Discretionary (XLY) lead the way, but everything else went according to script.

Climbing a Wall of Fear

There is an old saying that “the market likes to climb a wall of worry.” In reality, there is always something to worry about; therefore, the market has to move past potential problems and nagging issues, rather than dwell on worst-case scenarios.

However, living with the worst-case scenario engenders real-life fear. But when that becomes too extreme, it is thought to be a “buy signal” because “this too shall pass.”  Right now, the Fear & Greed Index is in the ‘fear zone,’ but a week ago, a month ago, and even a year ago, it was in the extreme ‘fear zone.’  The market is up more than 30% since last year’s lows, so while fear is uncomfortable, that could happen soon, which should comfort you.

The Fear Index (VIX) hit 31 less than two weeks ago. That level is considered the ultimate buy signal.

Hardware Flexes While Software Melts Down

Computer chips continue to rule due to insatiable demand to make the artificial intelligence (AI) Utopia real. The AI story is also playing a role in other market niches, from HVAC and cooling to data center construction. Trillions of dollars go a long way.

Wipe that Grin Off Your Face

Most of the big decliners yesterday were software (IGV) names, and even Wall Street upgrades couldn’t slow the carnage (see Datadog Inc (DDOG)).

The AI story gets more intense, and each week brings a higher level of competence, making the question of software's irrelevance more believable.

Companies considered the cream of the crop are getting chopped to pieces.

Ultimate Buying Opportunity or Time to Play “Taps?”

The names on the software meltdown list are a who’s who of Technology (XLK) companies. They got comfortable for sure, but this is the wake-up call.  They have to face the music and make major changes. 

Today’s Session

The early action is all about Technology (XLK) and, more specifically, artificial intelligence.  It's living up to the hype and more, and while there are still legitimate concerns about the endgame right now, it's all about the race and collateral damage.

Anthropic and OpenAI are duking it out in the media and on the development side.  Data Centers are being built at breakneck speed, and it seems everything is a bottleneck at the moment.

Chip makers set the tone, and it's amazing given the strong financial results from Taiwan Semiconductor (TSM).

Market Watch published the headline, which is laced with their typical negative jab, but is actually an important positive this morning.

Yes, the world is spinning while the Iran Conflict is being resolved. The stock market is a forward-looking mechanism.  It's not building a case for Iran to control the Strait or the Yuan to become the world’s reserve currency. It says the AI economy is here, and investors can reap the rewards.

Old School Buy Signal

The Dow Jones Transportation Index (TRAN) has been on fire – it’s a great proxy for the economy, and for old school investors, it confirms the big move in the market.

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