by Jason Bodner
March 10, 2026
Octopi have three-hearts and blue-blood. When they get stressed, one of their hearts, stops beating.
Recent market gyrations might make some investors feel their heart is on the verge of stopping.
The VIX just closed at its highest level since last April (after “Liberation Day”) at 29.49.
First, volatility surged after the U.S. invaded Iran. But that was volatility, not panic. The flows support that view. Recently we have seen both inflows and outflows, so risk has not been all in one direction:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
I looked back over the last 35-years to see what happened to the S&P 500 after the VIX closed at this level or higher. I’ll post it below. Would you expect disaster? You can open your eyes now… it’s not.
Stocks were higher at each duration later, and positive instances increased over the time-horizon:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
That is not the kind of disaster the headlines imply. None of this diminishes the seriousness of what is unfolding in the Middle East. The Iran conflict is real, and the risks are legitimate. But history has value when emotions run-hot. It reminds us how markets have behaved when fear takes center-stage.
Look at the long-arc of stock market history and the list of events that felt like the end of the world at the time. World War I. World War II. The Vietnam War. JFK’s assassination. AIDS. Black Monday. The Great Financial Crisis. COVID, plus assorted Taper Tantrums and Tariff Tantrums.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
In some of those moments, markets suffered violent shocks. In others, the fear felt enormous but faded quickly with time. Across all of them, the long-term trend of stocks still moved higher.
Viewed decades later, many of those terrifying headlines barely register on a long-term chart. The 1929 crash stands-out, but even that eventually led to one of the greatest recoveries in market history.
Now let’s narrow the lens. Since 1975, forward S&P 500 returns after major fear events show the same pattern, again and again. Returns one, three, six, twelve and 24-months later tend to rise.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
That perspective helps calm the nerves when markets start whipping-around.
The big “up” moves rarely bother us. It is the downside that creates heart-burn. But history highlights a few simple truths if you separate emotions from your brokerage account:
Volatility is inevitable, but sitting through a surge in volatility is usually the most rational choice.
- Long-term history shows these moments often become opportunities.
- If the last few days had you uneasy, hopefully that perspective helps.
- Now let’s look at what the data from this week is actually showing.
I mentioned earlier that flows have been mixed since the U.S. moved into Iran. Last week, from March 2 through March 5, inflows actually out-numbered outflows.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Energy saw massive inflows, which is hardly surprising. The attacks have sent shock-waves through the oil markets and the Strait of Hormuz remains closed as the conflict continues.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Energy was not the only place seeing capital move in.
- Financials, Health Care, Industrials, and even Technology all saw inflows.
- The most interesting development to me was Technology. There were no meaningful technology outflows last week, which is unusual so far this year. Since the start of the year, technology has been the #1 sector for outflows, accounting for more than a third of all capital leaving the market.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
And yet, in the very week the U.S. goes to war with Iran, the big technology selling disappears.
Instead, we are seeing the opposite.
A few weeks-ago on February 23, I highlighted the brutal oversold conditions in software stocks. At the time it looked like we were near capitulation. I argued there was opportunity and I even bought IGV, the software ETF, for my children. Since then, the ETF has rallied roughly 15%.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
This is a familiar story in the markets. A frightening narrative drives heavy selling-pressure. Investors hear that AI will destroy software companies and the selling accelerates. If emotions take over, it is easy to get shaken out of positions at exactly the wrong time, but following the data often tells a different story. When fewer than 15% of IGV stocks trade above their 200-day moving average, as they did on February 23, the forward returns have historically been extraordinary.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
At the 24-month mark, IGV historically delivered an average gain of 69%, and it was positive each time.
I am no oracle, but I am a stats-man, and a 100% success rate is hard to argue with.
For now, energy remains the hottest sector in the market. Oil briefly surged above $90 per-barrel, which explains why energy stocks are suddenly the crown jewel of the S&P 500.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
But even sharp oil spikes don’t spell disaster for stocks. Looking at crude price jumps since 1990, stocks moved higher in the following months.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
MoneyFlows Chief Investment Strategist Alec Young summed it up well:
“Don’t get spooked out of stocks by spiking oil prices. Since 1990, the S&P 500 has been 4% higher three months after big jumps in crude oil, with gains of 8% and 22% after six months and a year, respectively.”
In other words, volatility feels uneasy, but the long-term script doesn’t change.
Think of market volatility like an uncomfortable political debate at your in-laws’ house. Sometimes the best strategy is simply to sit there, mute: Nod politely, and wait for dessert.
All of this turbulence has pushed the Big Money Index (BMI) lower, but it has hardly collapsed. It has drifted down gradually while the broader market continues its five-month sideways grind.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Underneath the surface, flows remain mixed.
Semiconductors surged while software collapsed. Energy and gold are soaring while discretionary stocks lag. Exchange-traded funds tied to the broader market have seen significantly more inflows than outflows.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
This looks less like systemic risk reduction and more like rotation.
Here is how I see the path forward: When an Iran resolution arrives, whether days or weeks from now, oil prices should ease and energy stocks will likely cool off. The confirmation of incoming Fed Chair Kevin Warsh could open the door for rate cuts, especially with markets already sensitive to weak jobs data. And earnings remain solid. Over 70% of S&P 500 firms beat both sales and earnings estimates last-quarter.
Storm clouds eventually clear, and when they do, markets resume what they have done for over a century.
Climb.
“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
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Don’t Let Market Volatility Upset You
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Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation and distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner
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