Something in the Orange

“It’ll be fine by dusk light, I’m tellin’ you baby, These things eat at your bones and drive your mind crazy.“ 

– Something In The Orange, Zach Bryan, 2022

It has been a tough start to 2026 for financial markets to say the least.  And following three years of relentless, tech fueled US stock market upside, many are now increasingly wondering whether the orange dancing in the eyes of investors for so long is finally starting to extinguish.  With so much turbulence, volatility and uncertainty in today’s market, where the hell are we supposed to go? 

Never comin’ home?  The widespread despondency among investors is certainly understandable.  One has to look no further than a chart of the headline S&P 500 to see the pain in the market in recent months.  After peaking right before Halloween last year, the US stock market was already starting to grind to a halt.  Already trading below its October and January highs while struggling to hang on to its medium-term 50-day moving average (blue line in chart below) by the end of February, the market cap weighted S&P 500 Index broke decisively to the downside once the bombing started in Iran.  In the time since, support at the long-term 200-day moving average (red line) also quickly came and went.  And as the first quarter of 2026 draws to a close, the S&P 500 is on the brink of entering full blown correction territory at down -10% from its previous peak (it is lower by more than -8% in early trading on Friday).  Adding salt to the wound is that while momentum is starting to become extended to the downside, the market is not clearly oversold with an Relative Strength Index reading still holding marginally above 30.  As a result, a test of the ultra long-term 400-day moving average (pink line) in and around 6250 (down more than -11% from January peak) on the S&P 500 should not be ruled out over the next week or so.

A different look at the market highlights the anxiety investors have been feeling lately.  The CBOE Volatility Index, also known as the VIX as shown in the chart below, is a measure of market “fear” based on the price that investors are willing to pay for options contracts, presumably among other things to buy protection for their long stock portfolios.  Since the sanguine days of the second half of last year where the VIX was trading below 15, we have been moving steadily higher throughout 2026 to readings above 30 in recent weeks. 

These readings raise the understandable question.  Is the market poisoned?  And are we never comin’ home back to new all-time highs?  

Something else in the orange.  We see orange on the horizon when the sun is setting into dusk.  But we also see orange in the mornings when we start to see the sun.  And there are many things in the orange today that suggest brighter days are ahead despite the currently trembling market. 

Let’s take it from the top.  Three conditions are primarily important to drive the stock market higher long-term – sustained economic growth, moderate inflation expectations, and rising corporate earnings.  Where do we stand on each of these measures today? 

We begin with the latest projections on 2026 Q1 GDP as measured by the Atlanta Fed GDPNow estimate from the Federal Reserve Bank of Atlanta.  Why do I like this measure?  Because it is a reading based on the data, not the sentiment (or ulterior motives) that may drive many economists’ forecasts.  It has also been uncannily accurate over time.  Although it has cooled a bit, the latest reading for the current quarter is still a healthy +2.0%.  And checking in with our friends at the New York Fed Staff Nowcast that are also at roughly +2.0% for 2026 Q1, they are currently projecting nearly +2.7% for next quarter from April to June.  Put simply, the US economy appears to be continuing to grow at a healthy clip.  This is key for future corporate earnings (the “E” in the P/E ratio to value stocks), and it’s worth noting that earnings are still projected to grow by double-digits through the rest of 2026 and into early 2027.  And history has shown a very high correlation between corporate earnings growth and rising stock prices over time.  

What about inflation expectations, which according to this Chief Market Strategist ranks tied for first as the primary downside risk for capital markets going forward.  Why is that again?  Because sustainably higher inflation not only means narrower corporate profit margins and lower corporate profits, but also that the Federal Reserve would likely need to raise interest rates, which means liquidity is being withdrawn from the financial system (read: lower stock prices).  So, where do we stand today in what the market is pricing in for expected average inflation over the next five years (not what the financial news media might suggest could happen with inflation because oil has suddenly popped toward $100 per barrel)?  Not only have inflation expectations come nowhere near the levels that culminated with the Russian invasion of the Ukraine, they have barely budged in the wake of the Iran conflict and remain at relatively low levels.  Case in point – on February 27 just before the attacks on Iran began, the 5-year breakeven inflation rate was a relatively tame 2.40%.  At the peak of inflation worries on March 18 more than a week ago now, we hit 2.66%.  This is a rise of just 26 basis points to a level that frankly I’ll take all day long for the next five years to support higher stock prices at 2.66%.  And where are we as of Thursday’s close?  At 2.56%, down 10 basis points from the peak and just 16 basis points from before we started.  Put simply, the market does not see what is taking place in the Persian Gulf as inflationary.  At all.  Not even a little bit. 

Let’s keep going.  What about the price of oil, which has potentially meaningful short-term economic implications.  What can we take away here?  Is that the worst associated with the potential economic impact is potentially behind us.  The price of West Texas Intermediate Crude (shown in the chart below) peaked (smoothing out the March 9 intraday price spike) at $102.44 per barrel back on March 16.  Brent Crude peaked three days later on March 19.  Remember that the breakeven inflation rate peaked on March 18, more than a week ago.  Since that time, oil prices have started to drift lower.  At the same time, the daily metrics I’m following is less focused on the number of missile and drone launches from Iran and more focused on the number of oil tankers passing through the Strait of Hormuz.  Not coincidentally, the low point was two tankers per day on average during the period from March 19-22.  While the number of tankers per day has marginally increased since then, we are likely to see the rate of tankers passing through the Strait of Hormuz gradually increase in the coming days and weeks.  If this comes to pass, oil prices will likely continue to come down.  And if oil prices find further relief, stock prices are bound to like it.  

Let’s get back to the stock market itself.  Yes, the market cap weighted S&P 500 has broken key support at its 200-day moving average and may potentially fall as low as its 400-day moving average.  But lest we forget that the theme for 2026 and really going back to last Halloween has been the broadening of stock market performance.  In other words, it was the many other sectors not named Information Technology in the S&P 500 that had been leading the market higher over the last five months now.  And when we look at the S&P 500 on an equal weighted basis, we see that not only is the market actually holding support at its 200-day moving average, but all of the major trendlines (50-day, 200-day, 400-day moving averages) all continue to trend briskly higher even in the midst of recent market turbulence.  Is this a “buy the dip” opportunity that I sniff lurking underneath the market surface?  Only time will tell, but it sure has that aroma about it. 

One final something else in the orange that I will share as I write during the Friday intraday that I’m sure will have me eating crow for dinner tonight (what wine pairs well with crow?  I’ve heard Sangiovese, but hopefully I need not find out).  Coming out of yesterday’s brutal trading action, I would have reasonably thought that the markets were going to bleed hard to the downside throughout the trading day on Friday.  This is because browbeaten investors that have endured volatility and downside for yet another week would rather not be long heading into a weekend where the news continues to flow but the markets are closed until Monday morning.  But instead of bleeding lower, the S&P 500 opened solidly to the downside, but has been drifting marginally higher through the rest of the morning.  If US stocks can hold their ground, or better yet start to catch a bid through the remainder of the trading day, this would color me even more optimistic that a bottom may be starting to form underneath this market after a turbulent many weeks. 

One final bonus point of reassurance – something in the yellow if you will.  The price of gold has also been getting hammered along with stocks since the start of the Iran conflict.  But after fifteen days of increasingly relentless downside in gold prices, we’ve seen gold catch a bid including a nearly +4% bounce today.  Short covering?  Perhaps.  But gold being up nearly +4% on a Friday when the S&P may be finding its footing is constructive as we head into the holiday week next week.  

“But I miss you in the mornings when I see the sun, Somethin’ in the orange tells me we’re not done” 

– Something In The Orange, Zach Bryan, 2022 

Bottom line.  It has been a particularly difficult month of March for investors.  And while there are downside risks that will potentially require increasingly close attention as we continue through 2026, the constructive positive in the meantime is that a number of signs suggest that the market impacts from the geopolitical conflict in Iran may be entering the late stages and that relief may soon be coming to financial markets as the sun starts to rise over the blooms of spring.  

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Investment advice offered through Great Valley Advisor Group (GVA), a Registered Investment Advisor. I am solely an investment advisor representative of Great Valley Advisor Group, and not affiliated with LPL Financial. Any opinions or views expressed by me are not those of LPL Financial. This is not intended to be used as tax or legal advice. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Please consult a tax or legal professional for specific information and advice.

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Eric Parnell, CFA Chief Market Strategist

Eric Parnell is the Chief Market Strategist for Great Valley Advisor Group. Eric applies his expertise in finance and economics to manage multi-asset portfolios, mitigate risk, deliver advice that promotes informed decision-making, and facilitate investors achieving their short-and long-term investment goals. He leads the GVA Asset Management platform overseeing the management of asset allocation models for GVA advisors and their end clients.

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