Portfolio 3 - ETF Macro | Weekly Market Update
Why We Expect a Violent Bounce Soon
Stock Market Week in Review
Fourth Consecutive Down Week - Setting Up for Violent Bounce
This marks FOUR WEEKS IN A ROW of market declines - the longest losing streak for Wall Street in over a year.
The pressure is mounting from all sides:
Oil going UP: Brent crude $108/barrel (near recent highs)
Volatility going UP: VIX hovering around 25 (elevated fear)
Interest rates going UP: Fed holding at 3.50%-3.75%, cuts pushed to 2027
Stocks going DOWN: S&P 500 -5% from all-time highs, down ~3.5% YTD
Gold going DOWN: Despite inflation fears, gold sold off this week
This convergence of negative forces is creating extreme pressure.
But here’s what history tells us: After four consecutive down weeks, with fear elevated and positioning defensive, markets become COILED for a violent bounce.
We expect a sharp reversal soon.
The Week That Was (March 17-21, 2026):
Monday-Tuesday: Relief rally attempt
SPY bounced +0.25% Tuesday
Brief hope Fed would stay dovish
Oil paused near $100
Wednesday: Fed reality check
FOMC held rates at 3.50%-3.75%
Powell acknowledged rate HIKE was discussed
Market expectations shifted: No cuts until 2027
Oil spiked on Iran production facility attacks
Thursday-Friday: Selloff intensified
S&P 500 fell ~1.5% Friday alone
“Triple witching” (quarterly options expiration) added volatility
Brent crude hit $108/barrel
Fourth consecutive weekly decline confirmed
Final Score:
SPX: ~6,506 (down ~1.5% for week, -5% from highs)
VIX: ~25 (elevated, down from 27 but still high)
Oil: $108 Brent, $97 WTI (stuck near $100+)
10-Year Treasury: ~4.20% (rates stable but elevated)
The Four Horsemen of Market Pressure:
1. Oil Spiking (↑ $108/barrel)
What happened:
Iran war escalated into energy infrastructure
Israel struck South Pars gas field (world’s largest natural gas reserve)
Iran retaliated, targeting energy facilities across Middle East
Strait of Hormuz disruptions continue
Direct damage to production infrastructure (months/years to repair)
Why it matters:
Oil up 50% from January (~$70 → $108)
Energy-driven inflation accelerating
Fed can’t cut rates with oil spiking
Consumer spending pressure mounting
Implication: Stagflation risk (high inflation + weak growth)
2. Volatility Spiking (↑ VIX ~25)
What happened:
VIX fell from 27 to 25 this week (slight improvement)
But still DOUBLE the calm-market level of 12-15
Four weeks of declines = fear accumulating
“Triple witching” Friday added chaos
Why it matters:
Elevated VIX = expensive options (hedging costly)
Investors nervous, positioning defensive
Sharp moves both directions possible
Breakdown or breakout imminent
Implication: Market at inflection point, poised for violent move
3. Interest Rates Going Up (↑ Fed on hold, cuts pushed to 2027)
What happened:
Fed held rates Wednesday at 3.50%-3.75%
Raised 2026 inflation forecast to 2.7% (from 2.4%)
Powell: Rate HIKE discussed (though not base case)
Market now expects NO cuts in 2026
First cut pushed to July 2027 (futures pricing)
Why it matters:
“Higher for longer” is real
Earlier this year: Market expected 2 cuts in 2026
Now: Zero cuts, maybe hike if oil persists
Bonds selling off, yields stable but elevated
Implication: No Fed rescue coming, markets on their own
4. Stocks/Gold Going Down (↓ Both selling off despite “safe haven” narrative)
What happened:
Stocks:
S&P 500: Down ~5% from late January highs
Four consecutive weekly declines
Down ~3.5% YTD
Below key support levels
10 of 11 S&P sectors below 50-day moving averages
Gold:
Fell this week despite volatility and inflation
Copper dropped nearly -4%
Commodities mixed (oil up, metals down)
Why it matters:
“Risk off” isn’t working (even gold selling)
Forced liquidations? Margin calls?
Cash raising across assets
No safe havens except treasuries/cash
Implication: Indiscriminate selling = capitulation near?
The Critical Data This Week:
PPI (Wednesday before Fed):
Rose +0.7% month-over-month (hottest since July 2025)
Headline: +3.4% year-over-year (up from 2.9%)
Core: +3.9% year-over-year (up from 3.5%)
IMPORTANT: This was BEFORE oil spiked to $108
Services drove increase (broader inflation, not just energy)
Translation: Inflation was accelerating BEFORE the oil shock. Now it’s worse.
What’s Priced In vs Reality:
Market expectations shifted dramatically:
January 2026: “Fed will cut twice this year, economy soft-landing”
March 2026: “Fed on hold through 2026, maybe hike, cuts not until 2027”
This is a MASSIVE repricing.
But here’s the thing:
Bad news is now EXPECTED.
Oil at $108? Priced in.
Fed on hold? Priced in.
Stagflation risk? Priced in.
Four down weeks? Positioned for.
When bad news is priced in, markets often bounce on “less bad” news.
A ceasefire hint? Rally. Oil drops $5? Rally. Fed sounds less hawkish? Rally.
The setup for a violent bounce is building.
Portfolio 3 Holdings (No Changes This Week)
Current Allocation:
