S&P500: Oil Spike Drives Rotation in US Stocks Today, Energy Leads

Stocks Edge Lower as Oil Spike Triggers Rotation Out of Travel and Into Energy

U.S. stocks edged lower early Monday as rising U.S.-Iran tensions pushed oil higher and weighed on sentiment. The S&P 500 slipped 0.2%, the Nasdaq fell 0.4% and the Dow held near flat. The selling was limited. Investors aren’t panicking. They’re rotating.

Energy Runs, Travel Gets Hit

WTI crude climbed above $87 a barrel and the rotation was immediate. APA, Coterra Energy and ConocoPhillips each gained more than 2%. EOG Resources and Devon Energy rose over 1.5%. Chevron and Exxon Mobil both found buyers. When oil moves like that, energy stocks don’t wait for confirmation.

The airlines felt it on the other side. American, Delta and United each fell more than 2% as higher fuel costs raised margin concerns. Cruise lines followed. Carnival, Norwegian and Royal Caribbean each dropped over 2.5%. I’ve watched this happen enough times to know the sequence. Oil spikes, energy runs, travel gets sold. Every time.

Individual Movers Worth Watching

TopBuild surged more than 17% on a $17 billion acquisition announcement. Compass Pathways jumped nearly 25% on supportive drug development policy news. Marvell Technology climbed over 7% on AI chip headlines. Broadcom slipped. AST SpaceMobile dropped 15% after a satellite issue raised execution concerns. Crypto-linked stocks including Robinhood and Coinbase moved lower as Bitcoin declined over the weekend.

Technical Outlook

Technically, the S&P 500 Index (SPX) is in an uptrend but posting an inside move on Monday. This suggests a pause before the next rally or a transition day before the start of a near-term direction. Since the move is likely headline driven, traders will likely use the war as the next catalyst. The variables are lining up too. Will the ceasefire continue? Will the peace talks resume? Will the Strait of Hormuz reopen? These are three factors in consideration for the catalyst title.

The index is still near its record high reached on Friday at 7147.52. Taking this out will signal a resumption of the uptrend while resetting the closing price reversal top. There is no resistance so a chart pattern will likely send us the topping signal. And the best signal will be a closing price reversal top.

The former all-time high at 7002.28 is the nearest minor support point, followed by a minor retracement zone at 6968.77 to 6926.59.

Unless there is a dramatic top formation on major headline news, the SPX should remain in buy the dip mode. In the worst case scenario, we’ll see a correction back to the 50-day moving average at 6775.51 and the 200-day moving average at 6688.23. Another downside target is the longer-term retracement zone at 6732.21 to 6634.20.

The chart pattern to watch for today is a new high, lower-close. Otherwise, the uptrend continues.

What’s Next

Tesla, Boeing and Intel report this week. Those numbers matter but the war is still setting the tone. Oil and the war are still running this market and everyone knows it. The inside day is the S&P 500 taking a breath. It’s not a top. It’s a pause. Something out of the Middle East is going to break this market one way or the other and when it does it won’t be subtle.

More Information in our Economic Calendar.