[Week 14/52]: Was Yesterday's Pullback a Bargain? Is Today's Rally a Hoax?
Mar 23, 2026
In last Monday’s, ‘What I’m Watching,’ section, I mentioned we could potentially see SPY touch the 200-day moving average. It did 4 days later on Thursday. And even today, after a nice bounce back up, the SPY is still below it, and the 200-day is still acting as resistance.
When a key technical turns from a floor (meaning the price goes down, and bounces up when touching it), into a ceiling it’s usually bearish in the short term. I still have eyes on the 365-day moving average, though, less confident we’ll get there.
#1 My Contrarian Take on Iran: Watch Oils export volumes, NOT price
Are North American oil exports rising dramatically? Not yet, but a part of me thinks the real goal of Iran is to turn Chevron into Saudi Aramco. USA Oil Exports dropped 3% YoY, this is one way to get them back up. For example, there are port operators in Canada who can increase export capacity another 25% on Crude. This would require Refiner infrastructure to be re-calibrated at delivery locations. But if the risk of Middle East is forever now lingering, I expect buyers to diversify their suppliers as a result of Iran.
This means more USA/Canada sales to locations like Mexico, India, and Europe. It’s a long shot, but if we start growing exports 10-20% YoY, there’s going to be some really big rallies for oil stocks. This is fundamentally a volume thesis, not price thesis. The price will come down, but the question is do USA exports elevate and stay elevated. I give it a 10-20% chance to come true, but if so, I’ll be ready.
#2 10-Year shifting between 4% - 4.5% determines negotiation aggression
This range has served as the ‘negotiate hard’ or ‘negotiate soft’ zones.
I think the most important number in finance is 10-year Treasury. It measures the ‘risk free’ rate of parking your money in the safest asset in the world. Trumps number to avoid seems to be 4.5% on the 10-year. That’s an observation made from the April Tariff reversal. As noted in the tweet below:
“40% chance Trump tweets out ‘war is over’ and we explode to the upside.
The April lows of 2025 saw Trump’s reversal once he saw 10-year approaching 4.5%. This is I believe a key number he watches, and also probably the #1 reason why he wants Powell to drop rates so badly. This is a big risk to operating the USA efficiently.”
And as soon as the rate crept closer to that coveted 4.5%, he tweeted out an all caps message letting us know Iran is looking for de-escalation. And of course, the market rips.
So that’s how I’m tracking the volatility, I think the closer the 10-year gets to 4%, the more negotiating leverage Trump has, and the more bold he can negotiate. The closer it gets to 4.5%, the less leverage he has, and therefore his incentives lie in mitigating market volatility.
Just as a reminder for everyone, this number matters a lot because the USA’s debt base is enough to make 0.5% material, but more importantly, the Bond market is a representative of perceived risk of the public. And so it’s a real-time gauge to understand potential negative sentiment.
I wouldn’t be surprised if the 10-yr hits 4.15% the same day we again begin hard negotiations.
A great quote to put the current market into context:
Warren Buffett: ‘Bull markets are like sex. They feel best just before they end.’
If that’s true, then this probably isn’t the end to our bull market. Because the last 4 months haven’t felt incredible, they’ve felt insanely mundane. The markets have gone almost nowhere in 4 months. Recently, SPY just broke its 200-day MA. History says ~65% of the time it’s a quick blip (like Oct ‘23 & Mar ‘25, gone in weeks). Only ~35% turn crisis (DotCom/GFC). I don’t think this is a crisis. But I do think we’re going lower.
Today we’re going to do a data-driven probability synopsis of understanding if we’re in a bear market, if it’s just a downturn, or if it’s a crisis.
But first…
A word from our author in a Harry Potter style talking-painting
“Hey! Welcome to my blog, Don’s Daily!”
Hey, I’m Don! I’ve been building career memories for a decade. Over the last three years I’ve been reinvesting my own capital and time back it into my business. All the while learning and growing my net worth via public markets and crypto.
Over that same period, I also hosted 50+ virtual events with some of the world’s best VC investors and founders for our CEO group. Prior to all that, aside from my first job at Meta, I was lucky enough to raise $10 million in my twenties; doing my best to learn business, investor relations, and the startup mindset all at the same time. Maybe some of you can relate.
All that’s to say, I love business, I love money, I love to try and leverage my time.
This year, I set the goal to publish a thoughtful blog every Monday.. 52 of them! Don’ Daily is a recap of the entrepreneurship adventures I collect, as well as the new lessons I’m constantly learning from doing. My hope is that this entertains, inspires, and influences new creative ideas for you. Every Monday. If you enjoy the blog, please share!
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These are 7 of the last 9 times the SPY broke it’s 200 Day Moving Average.
You can see in most cases it’s pretty brutal for a period of about 6 months, then turns upward again. (unless it’s monumental like DotCom or GFC)
The chart, created by the outstanding @LanceRoberts, does miss 2 key points. The SPY also dropped below the 200 day moving average in October 2023, and March 2025.
The chart below shows how those moments were nothing more than a quick blip down over the course of 2 weeks to 1 month.
To me, that is 65% chance what is happening right now. I don’t think this is a 2008 level recession. However, I do foresee SPY hitting its 365 Day Moving Average, also featured in the 2023 and 2025 pullbacks.
Why do I not think this is structural? (At least, not yet). Said simply, we’re not heading towards a traditional recession. Earnings are growing, companies are making profits left and right. However, in an oddity, they’re doing this not as a result of manpower, but as a result of tech leverage.
So although companies are profiting nicely, their workers are lost in a sea of layoffs, AI replacement, prices that are ‘stuck’ at high levels, and daily anxiety inducing chaos.
You can see in the graph that EPS growth is increasing, yet PE multiples are contracting. This results in lower prices for stocks that are earning more money per share. This is the beginning of a bargain-making cycle, not a crisis.
Though, it might feel like a crisis to those holding the bag. The number of S&P stocks down at least 20% is now over 40% of all 500 positions in the index.
You can see this quantity of S&P stocks down 20%+ only occurs during pullbacks, but does not always signal a recession or bear market. In fact, 2020, 2019, 2022, 2023, and 2026 all saw similar breadth of declines. None of those times resulted in prolonged bear markets. Quite the opposite actually, they proved to be a wall of worry.
Zooming in.. this is where it gets weird. Don’t get fooled by the below headline, let’s think about it from first principles.
As you can see, examining the extremes of Tech on the left, and Energy on the right, two things should stand out to you when referencing our earlier chart.
#1: Tech had the best earnings growth, yet is the third worst performing sector.
#2: Energy had the worst earnings growth, yet is the best performing sector.
Go figure. So the market is discounting the present, almost inversely. Yet at the same time, putting a premium on their perceived future.
Here’s the fundamental issue with such a bet; that posturing requires dramatic change from today’s reality, and predicting that future is inherently impossible for humans.
I’m not saying the market is wrong, but I’m saying data is in fact going against sentiment. Tech should be up, Energy should be down. In reality, and in my opinion, they should both be slightly up, in tandem. The reason Tech is growing earnings, is because of AI. And the reason Energy investors believe in the future, is because of AI.
When people are under pressure, it’s our primordial nature to act. We want to do something to relieve that pressure. Sometimes we make the right move, but a lot of the time we do something which we think will relieve the pressure, instead it hurts us worse.
If you’re in the woods and hear a rustle in the bushes, some people might sprint up and run away instantly. But then they trip over a branch, they break their wrist, and the rustle in the bushes turned out to have just been a chipmunk.
That’s what I mean. In actuality, the best thing to do right now is prepare yourself for the worst, but don’t go running away tripping on a tree branch. Where you get yourself in trouble is when you become too negative, or too positive. And right now, negative sentiment is causing the market not to think very clearly.
The AAII survey shows 25% more Bears than Bulls
Historically, doing the opposite of this survey’s sentiment has led to more wins than losses after 12 months. I think a lot of the short term negativity has to do with it being a Midterm year. As I said in my last article:
Midterm year is inherently volatile, the party not in power is incentivized to want the market to tank, the party in power is incentivized to want a strong economy and market. This leads to a whiplash.
So.. what might be good timing? I mean genuinely, who knows. But looking at a few of the market forces in play, I think we can make a fair estimate for now.
In almost all previous scenarios, the market was negative % 1-month following the SPY touching 200 day MA. That’s my base case, so I wouldn’t expect. big reversal upwards before April 18th’ish (one month from when we first dipped below).
Then it brings us to May, when the market news will be filled with ‘new fed chair’ drama. That’s supposed to be Powell’s last month, and Warsh entry. But of course we’re in a stale mate there right now too.
Of the past 9 pullbacks, only GFC in 2008 and China Oil Shock 2015 had positive returns by month 3. (side note, GFC tanked from there, it was a bull trap).
So 3 months would put us at June 17th’ish. Meaning July would have a bit of natural uptick momentum, as 50% of the pullbacks tracked were positive by month 6. However, Month 6 would land us right in the middle of Midterm elections, which has further downward pressure. So I guess what I’m saying, there’s a very realistic chance that stocks grow earnings all throughout 2026, yet stock market holders don’t begin to see those rewards until after midterms.
As you can see in the above dispersion of returns, the biggest clusters sit around the 20% (16+38=54), and the 0% (20+14=34). In fact, only 12 occurrences have returned between 8-12%, or less than 20%. So I ask myself, is this year a -20, an average, a 0%, or a 20%.
Using common sense, this year aint average. So I’m taking that off the table.
I’d also argue with growing EPS this year ain’t a down -20%. So remove that from table.
Leaving us with a decision to choose between 0% returns which occured 34/88, or 20%+ returns which occured 54/88.
It’s a 60/40 decision. 60% chance we find a miracle recovery and end up 20% like last year. Or 40% chance the cocktail of midterms and Iran result in a stagnant stock price despite growing EPS.
This latter scenario would test even the most patient of investors, as it would neither be crisis, nor bull market, it would just be boring. Minimal true signal, yet also a period with a lot of noise.
I’d estimate there’s a 40% chance the market goes sideways all year, but with lots of volatility headline drama. 20% chance some exogenous force enters the restaurant to eat everyones meal. 40% chance Trump tweets out ‘war is over’ and we explode to the upside.
The trigger for the last probable outcome moment, is likely the 10-year hitting 4.5%.
The April lows of 2025 saw Trump’s reversal once he saw 10-year approaching 4.5%. This is I believe a key number he watches, and also probably the #1 reason why he wants Powell to drop rates so badly. This is a big risk to operating the USA efficiently. As of writing on March 20th, we are only 10 basis points away. As of re-writing on March 23rd, we nearly hit 4.5% and at that same moment Trump tweeted the war is simmering down :)
DISCLAIMER: I AM NOT A FINANCIAL ADVISOR, DO NOT TAKE THIS AS INVESTMENT ADVICE. YOU SHOULD DO YOUR OWN RESEARCH, CONFIRM ALL DATA FROM PRIMARY SOURCES, AND CREATE YOUR OWN THESIS. I write this purely as a way to hear myself think, to provide some level of education and insight, and share my thinking with our readers.
