US MARKET CALL: Still Targeting 8400, But Raising Odds Of Bearish Outcome To 30%

I. Performance

The good news is that our recommendation to overweight the S&P 500 Energy sector is working well (chart). The bad news is that it is doing so because the war in the Middle East has re-escalated. Saudi Arabia has shut down its East-West pipeline as a precaution after a drone attack that originated in Iraq. The pipeline had been moving 4 million to 5 million barrels of oil per day, amounting to 4% to 5% of global supply.