📊 70% Cash Into a War Selloff — The Score Didn't Flinch
The Edge Of Markets score sits at 5.18 — Neutral territory (30% QQQ / 70% Cash). It's been parked in this zone since late February, bouncing between 5.15 and 5.18 like it knew something ugly was coming.
This morning it actually dipped to 5.14 (Cautious: 40% SQQQ / 60% Cash) at 7:05 AM ET — before the open, before the worst of the selling hit. The model briefly wanted to go even more defensive. It's since bounced back to 5.18, oscillating between 5.18 and 5.23 through the session as the carnage unfolded.
QQQ is trading around $599.45, a full $13.68 below the 70-day EMA of $613.13. No EMA override. We follow the score directly.
Final Recommendation: 30% QQQ / 70% Cash
While the market dumped 2.5%, 70% of the recommended portfolio was sitting in cash watching the fireworks. The score didn't predict a war — it just had you positioned for one.
💣 Operation Epic Fury: How a War Broke the Market in One Session
Let's not sugarcoat this: the United States and Israel launched coordinated strikes on Iran's nuclear infrastructure, ballistic missile sites, and command-and-control centers in what the Pentagon called "Operation Epic Fury." Israel simultaneously ran "Operation Roaring Lion." A decapitation strike in Tehran killed Iran's Supreme Leader Ayatollah Ali Khamenei and several IRGC commanders.
Iran's response was immediate and aggressive — hundreds of drones and missiles launched at Israeli territory and US military installations across Bahrain, Qatar, and the UAE. Then came the move that sent oil traders into cardiac arrest: Iran declared the Strait of Hormuz closed.
That strait handles 13 million barrels of oil per day — roughly 20% of global consumption. Four vessels have already been hit in Gulf waters. Shipping companies pulled tankers out. Traffic through the strait has essentially stopped.
This isn't a "geopolitical risk" anymore. This is a shooting war with real economic consequences.
📉 The Damage Report: Blood Everywhere
Today was one of those days where every number on your screen is red and the only question is how red.
- Dow Jones: -1,100+ points (-2.5%)
- S&P 500: -2.34% — fresh 2026 low
- Nasdaq: -2.3%
- Russell 2000: -3.71% — small caps got destroyed
- VIX: Spiked 23% to 26.43 — highest in 3+ months
- Brent Crude: +8% to $83.83
- WTI Crude: +8% to $77.05
- Gold: Above $5,380/oz — fifth straight day higher
Nearly 90% of S&P 500 stocks traded in the red. International markets were even uglier — the Nikkei cratered 6.65%, FTSE dropped 3.59%. This was a global panic selloff, not just a US problem.
⛽ The Oil Problem Is Now an Inflation Problem
Remember two days ago when we were talking about hot PCE data and supercore inflation at 0.6%? Remember how the "glide path to 2%" narrative was already dead? Well, now throw an 8% oil spike on top of that dumpster fire.
If the Strait of Hormuz stays closed for more than a few weeks, analysts are warning gasoline could hit $3.50/gallon by summer. European natural gas has already surged 20%. This isn't theoretical inflation risk — this is a real supply shock hitting an economy that was already struggling with sticky prices.
The Fed was already in a bind: inflation too hot to cut, growth too fragile to hike. Now add a war premium to energy prices and the impossible becomes absurd. Rate cuts in June? Forget about it. The market was pricing in cuts as recently as last week. That bet is dead.
Trump declared inflation "tamed" just days before his military operation triggered the biggest oil spike since the invasion of Ukraine. The irony writes itself.
🎯 My Take: The Score Was Already Defensive — and It Mattered
Here's the thing about today that matters for Edge Of Markets readers: you were already positioned for this.
The score didn't predict a war with Iran. Nobody did — at least not the timing. But it didn't need to. The economic data had been deteriorating for weeks. Hot PPI, hot PCE, tariff escalation, supercore inflation surging. The model reads the economic landscape, and the landscape was saying "be careful" long before the first missile flew.
With 70% cash, a portfolio following the score lost roughly 0.7% today on the 30% QQQ allocation, compared to 2.3%+ for someone fully invested in QQQ. That's the difference between a bad day and a terrible one.
And when the score dipped to 5.14 at 7:05 AM — briefly flashing Cautious before the open — it was sensing the deterioration in real-time. It didn't stay there (bounced back to 5.18-5.23 range), but the fact that it sniffed out additional risk before the bell rang is exactly what the model is designed to do.
The score doesn't need to predict Black Swan events. It just needs to have you in the right posture when they arrive. Today, it did.
🔮 What Comes Next: War Premium, Jobs Data, and the Fed's Nightmare
The critical variable now is duration. If this conflict wraps up in days, oil retraces, markets bounce, and we go back to arguing about PCE. If it drags on for weeks — with the Strait of Hormuz closed — we're looking at a fundamentally different economic environment.
Meanwhile, this is still jobs week. ISM Services hits Wednesday, ADP employment Thursday, nonfarm payrolls Friday. The labor market data was supposed to be the main event. Now it's a sideshow to a shooting war, but it still matters — especially for the Fed.
If jobs come in weak on top of a war-driven oil shock, we're talking about a potential stagflationary setup: rising prices and slowing growth. The one scenario that makes everyone miserable.
⚠️ Bottom Line: Stay Defensive, Stay Patient
Score: 5.18 (Neutral). QQQ: $599.45, well below the 70 EMA. No override. 30% QQQ / 70% Cash.
The market just got hit with a geopolitical shock on top of already-deteriorating economic data. This is not the time to be a hero. The dip buyers who showed up on Monday got their faces ripped off today. There will be a time to add risk — but it's not when the Strait of Hormuz is closed, oil is spiking, and the VIX is at 26.
Key levels to watch:
- QQQ $595: Next support — if this breaks, $580 is in play
- S&P 5,700: Major psychological level and 2025 support zone
- Oil $85 Brent: If we clear this, inflation expectations will repricing hard
- VIX 30: Above this and we're in full panic territory
70% cash isn't exciting. But when the world is on fire, boring is beautiful.