This weekend brought with it news of US based strikes on Iran, sending global markets into a panic as the possibility for heightened volatility and further unrest brought uncertainly to the table. With the news came a slew of headlines that your clients are seeing on their television and social media, so it is worth having some talking points in your back pocket in the event of further volatility. Remember, the goal of Point and Figure charting is to help eliminate some of the noise markets throw at us each and every day, while still staying sensitive to market action as it persists. With that in mind, it is important to remind clients that you are monitoring the situation closely, but price action alone will dictate prevailing changes in overall allocation, rather the news headline of the last 20 minutes. Speaking of price action, markets opened trading Monday mostly lower as prospects of further volatility saw major domestic indices decline, while the likes of energy and defense names shot higher on the news. Broader domestic equities ultimately rebounded, seeing SPX make its way back into the green throughout the afternoon. While no one can say for certain what direction things will head next, we can all probably agree that there will continue to be back and forth action in the near future as markets digest the developing situation.

On the news, some of your clients might look to call in and ask about their exposure to aerospace and defense names if things continue to escalate. As you would expect, representatives from the sector popped on the news, seeing the likes of PPA or MISL advance heavily during trading on Monday. Those following the technicals might already have had exposure to the space for the last few months, as both funds score strongly (and have for the better part of the last few years) according to their NDW fund score. MISL was added to the Focus Five model to close out last year, while PPA has been a holding of the Invesco Sector 7 Model since 2022. Both funds are up over 15% so far this year and the technical picture is strong. Those interested in looking to pick up exposure to either option may eye a bit of normalization out of semi-extended territory, but both funds maintain strong support just below current levels. All that to say, it isn’t “too late” to open positions in either fund around current levels.

For those of you looking for more focused exposure to the space, there are several different avenues available to you on the platform. In the screenshot above, you’ll notice a highlighted “holdings” tab which allows you to drill down into the holdings of any fund available on the platform. At the highest level, we would suggest focusing on stocks that earn a rating of 4 or 5 according to the TA scoring system. Utilizing the screener (old or new) you can drill down even further. For example, there are a total of nine 4 or 5 TA score stocks that are a holding of either PPA or MISL that are 1) on a pair of buy signals and 2) not heavily overbought on their default chart. Those stocks are included below based on results as of 3/2/26. As volatility could continue as more news comes out of the Middle East, remember to utilize the alerts to be notified of positions hitting price targets or change in technical strength.

The market has found a new narrative to rally behind—and it’s shying away from the very thing that previously led it higher: AI. As artificial intelligence continues to advance, so too does its disruption of established companies. While the market is roughly flat on the year, there has been a lot of movement beneath the surface of domestic equities, with each of the top nine sectors in DALI changing from the start of the year.

One popular explanation for recent rotation within domestic equities is the HALO (hard assets, low obsolescence) trade, a term coined by Josh Brown of Ritholtz Wealth Management. The term refers to investors leaving companies at risk of being replaced by AI while moving to companies involved with hard assets whose business operations can’t be easily replaced by LLM‑driven automation. Consequently, the HALO trade has been a tailwind for capital intensive sectors as investors rotate into them and away from areas disrupted by AI.

No area has been impacted by AI more than software companies, which have sharply declined over the last several months as investors worry about their longevity in an AI-dominated landscape. These concerns intensified following last month’s release of Claude’s Cowork tool, seeing software fund IGV fall another 10% in February  as it sits more than 30% below its late‑2025 high. Meanwhile, its fund score is down to an abysmal 1.19 after being as high as 5.76 several months ago. However, not all areas of the market have seen this same level of disruption, even within technology.

Notably, semiconductors have been relatively immune to the weakness of software companies. The VanEck Semiconductor ETF (SMH) set new highs late last month and displays a near-perfect fund score of 5.87. Over the last six months, SMH has gained an extremely solid 36.5%, whereas IGV has plummeted a whopping 24%. The more than 60% spread between the two technology groups is the widest going back to at least 2001, marking a extremely unusual departure from historical norms. Unlike software, AI development continues to be a huge benefit for the broader semiconductor industry, potentially justifying its much greater relative strength and outlook.

Despite semiconductor companies’ best efforts, technology no longer sits in the top three spots of DALI as investors look to other areas. Taking the place of Technology and Communication Services at the top have been Industrials, Energy, and Basic Materials, respectively. Additionally, those three are the best performing major sectors when looking at SPDR funds YTD. The rise of these sectors marks a stark contrast with prior leadership dominated by mega cap tech and growth companies. In fact, Industrials, Energy, and Basic Materials now have a total of 571 tally signals in DALI, which is their highest mark in several years and close to their most of all time. Looking at similar environments of strength for those three sectors draws parallels between our current environment and 2021/2022 as well as the mid-2000s. While both of those periods preceded some eventual market downside, every market environment is unique, so we shouldn’t put too much stock in those instances with domestic equities holding up well for now.

Staples have also benefited from their irreplaceability in the same regard as many of the “heavy asset” sectors. The State Street Consumer Staples Select Sector SPDR ETF (XLP) is the fourth best performing sector this year. Within Staples, food and agriculture companies have done even better, with the VanEck Agribusiness ETF (MOO) up 17.6% YTD with a solid fund score of 4.68. Recent movement has left it somewhat overbought, so those investors seeking to buy should wait for a pullback or consolidation. Those looking to diversify into HALO areas could look at Staples or any of the three previously mentioned sectors, especially if the groups continue to gain further strength.

The development of AI is still in its early stages, and there continues to be a high level of uncertainty surrounding its impact in the coming years. However, it’s encouraging to see strength within domestic equities broaden outside of mega cap technology. A market not dependent on its largest names is a healthier one, and old economy areas could keep the market moving higher even if further AI disruption continues.

Daily Option Ideas for March 2, 2026