Here’s What Happens to Stocks After an Oil Spike
Speakers
Summary
- The market showed extraordinary resilience following the Iran/Israel escalation, erasing a 1,200-point drop to close down only 400, driven by rotation rather than panic selling.
- Software stocks (SaaS) are staging a significant counter-trend rally, recovering from "AI displacement" fears, with names like Intuit and ServiceNow bouncing double digits in days.
- Historical data suggests that when crude oil spikes 5% for two consecutive days, the S&P 500 has an 83% win rate over the following 12 months with a median return of 22%.
- A divergence is noted in the "AI trade": while infrastructure (Nvidia) stalls due to multiple compression and competition, the application layer (Software) is finding a floor.
Trade Ideas
CrowdStrike reported strong earnings ($5.25B ARR, +24% YoY) but the stock didn't rally massively due to guidance. The market realized that AI (Anthropic/LLMs) doesn't solve cybersecurity; in fact, more AI workloads create *more* endpoints that need Falcon's protection. Long-term hold. The pullback offers a chance to own the "platform winner" in cyber, similar to how semi-cap equipment consolidated to 3 players. Valuation remains high (20x sales); guidance must be perfect to sustain the multiple.
Energy stocks anticipated the geopolitical tension before the news broke. EOG is retesting a breakout; OXY has a "gap and go" setup. "News follows price." Even if oil doesn't go to $100, energy stocks act as a hedge against geopolitical risk. The technicals (Golden Cross on OXY, breakout retest on EOG) signal momentum. Buy/Hold. Do not sell energy exposure even if it drags temporarily; it is the necessary hedge. De-escalation in the Middle East could cause a rapid unwind of the risk premium in oil prices.
Software stocks were decimated (down ~60% in some cases) on fears that AI would replace them, but are now stabilizing/bouncing (Intuit +22% in 5 days). The "AI kills SaaS" narrative was overdone. Incumbents like Toast (restaurant billing) and ServiceTitan (trades billing) own the workflow and will likely be the ones to *deliver* AI features to their verticals, not be replaced by them. Buy the rotation. The market is realizing these business models are not obsolete. If these stocks roll over and make new lows, the "AI disruption" thesis might actually be valid, leading to a much deeper selloff.
Drone warfare (kamikaze drones) has become the standard for modern conflict, as seen in recent geopolitical escalations. The "Defiance Drone and Modern Warfare ETF" (JEDI) holds the companies supplying these specific munitions (Kratos, AeroVironment, etc.). Watch. It is the pure-play vehicle for the "warfare by drone" thesis. High concentration in volatile defense contractors; regulatory shifts in defense spending.
Nvidia beat earnings and raised guidance, yet the stock has gone sideways since August 2025. The company is suffering from the "Law of Large Numbers" and multiple compression. Customers are exploring cheaper alternatives (TPUs, ASICs) for inference, eroding the "monopoly" premium. Avoid/Neutral. The stock is "too big to move" and is undergoing a natural valuation reset (22x forward PE). A re-acceleration in demand for Blackwell/Rubin chips could prove the competition thesis wrong.
Josh sold his Blackstone position (calling it a "falling knife") despite believing the company is high quality. Sentiment on Alternative Asset Managers is toxic due to headlines about private credit valuations and liquidity caps (e.g., BREIT/BCRED). Even if fundamentals are fine, the "headache" and negative news flow will cap upside. Sell. Capital is better deployed elsewhere until the negative sentiment cycle regarding private credit washes out. If the "soft landing" occurs and private credit defaults remain low, BX will likely rip higher as fears abate.
DraftKings stock fell 60% (from $50s to $20s) on fears that "Prediction Markets" (like Kalshi/Polymarket) would steal market share. The CEO stated there is no discernible impact on revenue. The company is cleaning up stock-based comp and turning profitable. The fear of prediction markets is priced in, but the impact is exaggerated. Buy. A contrarian trade on a beaten-down stock where the bearish narrative (competition) is false. Regulatory crackdowns or continued cash burn; Michael argues the business model fundamentally destroys its own customer base (gamblers lose money).
Newmont Mining pulled back to its long-term moving average within a powerful uptrend. This is a classic technical setup: a stock in a secular bull market revisiting support due to an exogenous event (market volatility). Buy the dip. It is a low-risk, high-reward entry point at the moving average. Gold prices reversing or the stock failing to hold the moving average support.
Up Next
This The Compound News video, published March 03, 2026, features Josh Brown, Michael Batnick discussing CRWD, EOG, OXY, XOM, CVX, NOW, TOST, TTAN, INTU, JEDI, NVDA, BX, DKNG, NEM. 8 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Josh Brown, Michael Batnick · Tickers: CRWD, EOG, OXY, XOM, CVX, NOW, TOST, TTAN, INTU, JEDI, NVDA, BX, DKNG, NEM