Oil, Inflation, and Tech Selloff Might Be 3 Strikes You’re Out

DANO WEIR: It's Friday, March 27th, 2026, and you're about to go on the Markets. Baseball season kicked off. We had our opening day and, well, the other great American pastime, the market. We're going to look at the Markets today. Oil, inflation, and tech sell-off might be three pitches. The market just can't shake off. What adjustments might be made with midterm elections on deck?

DANO WEIR: Is it a baseball? We're doing some baseball puns there. A look at S&P patterns in the last 75 years of midterm elections. All seven of the MAG7 stocks are down this year and below the S&P as a whole. We compare their era to prior bubbles across the decades. And the line that was crossed that confirms to Daren that the S&P is indeed in a downturn. Let's get started.

SPEAKER 2: The stock market, the economy, your money. What's the latest? And what could be next? Find out now with Fermata On The Markets. Straightforward financial market updates for the brands of Fermata Advisors, Sonoma Wealth Advisors, Fermata 401k and Fermata Tax. On the Markets starts now.

DANO WEIR: As I said, my name is Dan O'Weir. I'm the marketing director. If you know our firm, you know these guys. If you're new to the firm. Daren Blonski, Chris Sipes, they're the managing principals of Sonoma Wealth, private wealth arm of Fermata Advisors. Chris, I need some motivation. Give me some wisdom. Give me a quote to give me some perspective this week.

CHRIS SIPES CFP®: All right. Well, the thing is, I think we always have to keep in mind that our emotions are going to drive investment decisions. And you want to be aware of what emotions are affecting you at any one time. And those Those can be, if you think back, Dan, not that long ago when we were in the AI mania, how that felt, how it felt like everybody was just could not wait to jump in, you know, getting calls every day.

CHRIS SIPES CFP®: How do I get in on AI? People kind of tripping over themselves to throw money into the market. Now we're at the opposite end of that where it's like, boy, things don't look so good right now. You know, we tend to like. Overcompensate in either direction. And so this quote from William Simon is really great.

CHRIS SIPES CFP®: He says, I continue to believe, oh, sorry, that's the next quote. This quote is about inflation, which we're starting to see more signs of inflation around the corner. And his quote says, I continue to believe that the American people have a love-hate relationship with inflation. They hate inflation, but love everything that causes it.

CHRIS SIPES CFP®: And boy, that's the truth. There's a book on interest rates. I'm blanking on the name. It'll come to me sometime during this show.

CHRIS SIPES CFP®: But the guy says that everybody loves an early inflation because it kind of pushes a lot of things up, asset prices and such. But then it kind of starts to take hold and then rears its ugly head and inflation is bad for asset prices because it pushes up interest rates, pushes up the cost of money.

CHRIS SIPES CFP®: And so in the early parts, though, people tend to like it, especially politicians, because they're the biggest cause of inflation by spending more, running huge deficits, you know, cutting taxes, all the things that we do to basically not keep up with our are spending, those things tend to contribute to inflation. And then of course, wars generally cause inflation. And here we are.

CHRIS SIPES CFP®: So we'll see if this time is different, but at least for now, we've been talking about how a lot of the asset classes that benefit from inflation, like commodities, are showing signs of inflation. And things like interest rates are showing signs of anticipated inflation around the corner. So it's likely that the market is pricing in some more of that coming down the pipe.

DANO WEIR: Chris, is that book the Margaret Kennedy book?

CHRIS SIPES CFP®: No.

DANO WEIR: Is it inflation-free money?

CHRIS SIPES CFP®: It's not.

CHRIS SIPES CFP®: I'll come back to it.

DANO WEIR: Okay.

CHRIS SIPES CFP®: Okay. So. Here's what I was talking about, though, when it comes to your emotions. And you sort of know when the market corrections hit certain points, Dan, because you're going to hear more and more Warren Buffett quotes. It was like a barometer. The more the market goes down, the more Buffett quotes come out.

CHRIS SIPES CFP®: But I do think he is a useful person to look to because a lot of his biggest and best investments have come at times when everybody else was running for the doors. So his quote is, the fact that people will be full of greed, fear, or folly is predictable. The sequence is not predictable.

DANO WEIR: He just sits around and thinks of stuff like this. I mean, he just.

CHRIS SIPES CFP®: Yes. Yes. Firing off.

DANO WEIR: He's firing off.

DAREN BLONSKI CFP®: Well, hey, to that point, Dan, Drunken Miller, who's one of the, he's probably one of the most famous traders of all times.

DANO WEIR: Yes.

DAREN BLONSKI CFP®: You know, he has a quote he talks about. He's like, people ask him like, well, what do you do? And he's like, well, for the most part, I just sit around and think and read, you know? And I think Buffett probably kind of does something similar.

DANO WEIR: Yeah. Good insight here. Hard to tell where we're at in the moment.

CHRIS SIPES CFP®: Munger, you know, one of Buffett's partner, he'd always talk about inverting, right? So instead of thinking about how do I do something really smart, how do I make the right move here? He would say, think to yourself, how do I not do something stupid? How do I make it so that I eliminate making a bad decision and doing something I'm going to regret later? And that's a lot.

CHRIS SIPES CFP®: A lot of times much easier than trying to do something brilliant. You know, Bezos saying, bet on what's not going to change rather than what is going to change. And so I think that when things look like they do now, which is unpredictable, and it feels as though our survival instincts start kicking in, hey, get me to safety, think back to the prior times when things like this have happened.

CHRIS SIPES CFP®: And what was the prudent approach and what turned out to, to be the right way to approach these things. And most of the time, you know, it's like Daren said, you, you want to, you want to think and read and make sure you're making, making a good decision, not acting out of fear or greed. So, okay, let's take a look at some of the prior oil shocks.

CHRIS SIPES CFP®: And I think what we would say about the last couple weeks is that it's a very much. Seems like a panic type of sale. When you see kind of everything selling off, stocks, bonds, gold, everything, you know, just kind of getting dumped at the same time, typically that's a panic.

CHRIS SIPES CFP®: Now, those don't tend to last long and they tend to, you know, even out and then we get kind of back to approaching the Markets in some sort of a logical way. Now, If you look, this is from JP Morgan, and they're saying, looking at all past episodes of oil spiking over 50%, over the following 12 months, equities tended to be up.

CHRIS SIPES CFP®: And they, pointing out these areas where the market was down 12 months later, which was 1974, the year 2000, and 2021. They say, we do not see this to be a 1974, 2000, or 2022 backdrop. Now, who knows?

CHRIS SIPES CFP®: Nobody knows what the future is going to be.

CHRIS SIPES CFP®: But those were the three instances where the S&P was down 12 months later. And only one of those was a real significant down, which was the year 2000, the debt bubble bursting.

CHRIS SIPES CFP®: There's been many times where we've had these spikes in oil prices, and once the market adjusts to it, it tends to get past it.

CHRIS SIPES CFP®: All right, now this from Ryan Dietrich at Carson. He says, midterm years, I think we kind of forget that midterm years tend to be not great either. This is all clouded by the war right now, but even if the war wasn't happening, midterm years tend to be volatile years in the four-year presidential cycle. So he says, Ryan Dietrich says, midterm years tend to see the largest peak to trough pullbacks.

CHRIS SIPES CFP®: That's the bad news. But the good news, off the midterm year low, stocks have never been lower a year later and up nearly 32% on average. So you see that peak to trough, that's like, you hit your high dollar Mark, which people always... Anchor to. We all look at our portfolios and say, Remember when it was X and now it's Y.

CHRIS SIPES CFP®: That's the peak to trough. But then you see the returns off of that trough. And the challenging thing is that we never know when that turn happens. And that's why when you have a portfolio, you want to understand how it's performed in the past and be fine with it. Because making adjustments on the fly is usually the wrong decision.

CHRIS SIPES CFP®: Because you're making decisions under duress. Or you're making decision out of a lot of greed. So you want to, you want to know, you know, how that portfolio is likely to, to, to fluctuate and, and be fine with it. So we're, we're in the midst of, I think the S and P is down a little more than 8% right now. So not, not even a technically a correction yet.

CHRIS SIPES CFP®: And so, there's been many times where that's been worse, as you can see here in midterm years, the peak to trough. Tends to be pretty steep, but then the returns a year out tend to be pretty good too.

DANO WEIR: And a good example to remember if you're trying to have a recent example to say, but this time's different. This same time last year, we were going through the tariff exercise. And as that was happening, it's very similar to now, a panic and everything's selling off, right?

DAREN BLONSKI CFP®: Why is it always around spring break? That's what I want to know.

DANO WEIR: I mean, come on. And so just think back to then, how you felt then, and how it seemed impossible that anything could ever go up again. And the S&P ended the year up, gold ended the year up, very much so, last year. And so here we are again, almost the exact same scenario, but a similar panic, a similar time of year. You know I'm not saying that it will, but I'm just saying just recently, a year ago, it did.

DAREN BLONSKI CFP®: So to that point, Dan, a year ago when we were going through this during spring break, I'm still bitter about that. But we were down when we panicked about the tariffs were going to end the world. 21% down was the bottom. If you bought the bottom right now, the bottom is 9.11%. So, you know, we...

DAREN BLONSKI CFP®: Not shocking if we hit another 10% down, right? But absolutely, I think now looking back, anyone would agree like, hey, hold the line because these things bounce quick, especially with the way the politicians run things nowadays, which is very much the taco trade as we talked about last week, or you guys did.

CHRIS SIPES CFP®: Yeah, that's true. And the great JP Morgan chart that shows... You know, the average pullback in the S&P is around 14. So we're not even there yet. And I think it's actually remarkable given everything that's going on that things are holding together to that degree. And so that gives you hope that, you know, the market is seeing something that we're not.

CHRIS SIPES CFP®: Maybe it is that taco trade, Daren, like you said, but it's seeing something that is positive. And anytime you're looking at things and thinking, hey, the market is wrong. Most of the time it's you that's wrong. And I'm, you know, myself included. And so you have to really give credence to what that market is saying, the hive mind. So, all right. To your point real quick.

DAREN BLONSKI CFP®: Prince, if you're not spending, if you like to invest and you're not spending half the time arguing with yourself about why you're wrong, you're absolutely wrong. It sounds kind of crazy, but like so few people actually step back and try to... Argue in their own mind, like, here's why I'm wrong. And here's why my outlook is absolutely not correct. But that process is absolutely critical for successful investing.

CHRIS SIPES CFP®: Yeah. You know, just to riff on that for a second, talking before the show about managed futures, last spring, managed futures, which is trend following, was absolutely getting crushed.

CHRIS SIPES CFP®: Imagine the new administration coming in and pretty much the worst type of investment strategy you could have picked coming into that administration was trend following. Because the trends just got blown to pieces. And about this time last year, you're looking at those in your portfolio and you're thinking, okay, it's just never going to work again.

CHRIS SIPES CFP®: Strategy is broken forever. It was in its I think it was in its largest drawdown, you know, if not the largest one of the largest drawdowns for trend following in history. And you just want to Just get them out. I can't look at them anymore.

CHRIS SIPES CFP®: Fast forward to this year, and most managed futures funds are doing great, trend following on commodities and currencies and such and such, and just having a great year so far. So usually, not every time, but usually when you're just, ugh, you just got to hold through because usually it's the darkest before the dawn. Now, sentiment.

CHRIS SIPES CFP®: Sentiment is, bearish 49%, actually down a little bit, which I'm surprised off of last week. We're at 49%, but still pretty bearish. The bearish high was in April, almost a year ago. We were, we were more bearish at last April about tariffs than we are, right now about the war. That's interesting data point there. CNN fear and greed index.

CHRIS SIPES CFP®: Is at 17 extreme fear it's unchanged from last week the Bitcoin fear and greed index at 10 extreme fear down from 23 last week so sentiment is pretty poor at the moment people people feeling like things are pretty bleak and then you look at consumer sentiment also we got the new reading today down at 53 really outside of recessions you hardly ever see sentiment this low get save maybe 2022 when the inflation was ripping and so we've just been down here in the doldrums on a consumer sentiment standpoint and investor sentiment standpoint now if you're a contrarian when you look at this and you go okay eyes perk up a little it's the old franklin not franklin temple John templeton said you know you want to invest when there's blood in the streets don't think there's blood in the streets yet but you get the idea of like Hey, a good time to invest is when everybody thinks it's the wrong time.

CHRIS SIPES CFP®: So kind of full of investing quotes this week, guys. But it's one of those things where you look at the sentiment and you feel it on your own. You're like, ugh, you know, not much to get excited about right now. And you have to take a step back and say, you know, keep your perspective as an investor and what this is likely to look like. You know, things are going to look like once we're past this.

DANO WEIR: I have an aside to share just real quick, and I hope Daren enjoys this. So I, from on a marketing project for the firm, I was working with one of our advisors, Shelby, last week, and we were talking about a particular way we were going to do something. And so I was advocating for one way, and then I took a breath, and then I completely switched and advocated for the exact other way.

DANO WEIR: And I laughed and said, oh, I'm talking out of both sides of my mouth like Daren. Which usually is an insult. Usually that's an insult, right? To say that she's like, why would you say that? I was like, no, no, he says that he does that.

DANO WEIR: And that's a perfect example of this, which is that, you know, you're, you're just like he said, are you able to talk yourself out of the logic? Are you able to like the decisions that you want to make? Are you able to, you know, argue the other side so that you're not, you know, because sometimes the way that you should be should actually be the exact opposite. Like you said, blood in the streets.

CHRIS SIPES CFP®: Absolutely. Absolutely. So, now this is a very interesting Deutsche Bank, came up with an index on when Trump might change his mind, the taco trade. And, let me just read from Deutsche Bank here. Maximilian Ulier and his team at Deutsche Bank developed a simple and useful index of the pressure on the president.

CHRIS SIPES CFP®: An equal weight measure composed of four-week changes in the S&P 500, the 10-year treasury, short-term inflation expectations, and the presidential approval rating. And they concluded with the heat is on. Pressure is higher now than it was during Liberation Day.

CHRIS SIPES CFP®: So this is interesting. Obviously, we've seen hints of changes and backing out and this and that and the other things. So... And you see the market kind of turn on a dime when those things happen. So you really can't be caught flat footed here. And just like, you know, the changes going in happen so quickly, they can happen just as quickly going out.

CHRIS SIPES CFP®: And so this index would be interesting if this becomes even more handy as people look at what's going to happen. Frankly, I think that's probably what the market is. Considering at this point and the reason why things are not down more than they might otherwise be is that they expect a quick resolution and a change.

DAREN BLONSKI CFP®: You know, to that point, Chris, let me jump in there for a SEC. You know what's different? Can you go back one slide? Between right now, like if you look at this index, right, and Liberation Day, tariffs delayed, Trump had all the control then, right?

DAREN BLONSKI CFP®: And I think what, whether Trump or his people might have underestimated is, I was reading some articles this morning that if you kill All of the people who run a regime in a country, because literally they're on to the third level regime leaders right now, you kill them all.

DAREN BLONSKI CFP®: If you want to just stop fighting because the market's getting too bad or the oil has gone up too much or interest rates are gone up, who do you talk with?

DAREN BLONSKI CFP®: Because if you look at how Iran set up their military, it functions with 31 different separate entities. Effectively, they planned for this day that when the Ayatollah and all his people would get killed, then each of the different jurisdictions like our counties in the United States would just function militaristically.

DAREN BLONSKI CFP®: So now you have to go through each one of these. They all ballistic missiles. They all have people in charge. They all have drones. And you got to start taking all that out. I mean, we've bombed. I think we've dropped something. I saw the other day, something like 10,000 bombs now in Iran. I mean, that's crazy between us and Israel. It's a lot.

DAREN BLONSKI CFP®: And we're still probably not even close to doing everything we need to do to actually get it to calm down. And then if you've killed all the leadership in a country, and I'm not saying we shouldn't have or should have. I'm just saying here's the reality of it. If you kill all the leadership in a country, it turns into a lawless state, right? So then you have all these factions.

DAREN BLONSKI CFP®: You got the Kurds and the Pakistanis and Afghanistan. And you've got ISIS and ISIS-K coming in and start trying to claim different parts of the territory of Iran. It turns into lawlessness. So this idea that we could just go in there, kill a bunch of people, and then just stop the fighting because now midterms is going to come up or oil spike too much and rates are going too high, I think is way too much credit.

DAREN BLONSKI CFP®: It's kind of always my issue with conspiracy theorists, right? Like it's the issue with conspiracy theorists is we have way too much credit for the ability of any one group of powerful people to control all the different variables that happen in life.

DAREN BLONSKI CFP®: It just doesn't make sense. And so I think in this scenario, like we've, we have definitely done some damage and I wonder, I don't know. I wonder if, you know, putting the genie back in the bottle might be a little bit more difficult than perhaps, even Trump thought it was going to be.

DAREN BLONSKI CFP®: At this point and i think the chart might be saying that and i'm going to show you in my section why i i think that but it's still very interesting nonetheless and we're here for it and Daren the way that you describe that i just want to i'll make this quick but the way that you just described that whole scenario reminds me of a wildfire which.

DANO WEIR: Is when the wildfires happened in Sonoma County i was working in radio And I went through 2017 and didn't go out into them in 2019. They came back and I was like, I need to see this. And so I actually went as a wildfire reporter. I didn't know what I expected, but in my mind, I just expected like there's this wall of fire, right?

DANO WEIR: And it's like us versus this wall of fire. And we're just trying to push back the line and it's in a nice, neat circular shape. And we're just trying to push it all back. And when we actually went out into the hot zone, I'm like, where's the fire? You know, we're driving through.

DANO WEIR: Acres and acres of nothing and what it really was was these very diffuse like this is on fire that's not and that's on fire and that's not and it's not it's asymmetric so it i mean you you how you're describing the Iran situation is very similar in that it's it's not just like oh there's where the bad guys are let's go have a fight at the one line like this thing is all over the place and there's many layers it's not as simple as okay we're done well.

DAREN BLONSKI CFP®: And so to your point to use your analogy.

DAREN BLONSKI CFP®: That I think feels realistic to me is there's two instances in life where like I can really say for sure like you can feel the presence of something way more powerful than the human and that's standing in front of the really you know like north shore Hawaii during the winter waves that are just massive and just rocking you and then you realize just like how not so powerful you are as a human like you just get absolutely destroyed and i remember in high school i'm like oh i can swim in these things and i went in and just got absolutely pummeled and there was just nothing i could do and then the other instance i had was when i was fighting fire and i remember this one fire is called the trout fire which was in the Mendocino National Forest and we were cutting line up this ridge and In the Mendocino National Forest, the winds shift around three or four in the afternoon.

DAREN BLONSKI CFP®: And it's related to the fog pulling in and out from the ocean. And when it switches from a downhill draft to an updraft, the fire is going to blow up. That's why you always see fires kind of blow up because the fuel moisture goes down and then the winds shift in the evening. And that's what creates around here these really violent fire episodes.

DAREN BLONSKI CFP®: So you literally could be doing what you're doing, Dan, which is walking around the fire saying, where's the fire? Oh, there's some smolder here, smolder here. And then in five minutes later, there's this massive wall of flame. And I'll never forget. I'm sitting on this ridge watching this fire just literally just rip the bark off trees, just straight, just gut them.

DAREN BLONSKI CFP®: And I just sat there and the only thing that was protecting me was the way the winds were shifted. The winds had shifted just slightly different. I would have been completely toast and there was not a thing we could do about it because it just, we got caught off guard with the way the winds were in that area. And...

DAREN BLONSKI CFP®: That was another moment where you felt your mortality in front of your face. And I think there's something to that where when you unleash chaos in the world, you just go start killing all the leaders, good or bad, right? I mean, that's the argument why you keep a Kim Jong-Un in place for as awful as he is. You don't know what's behind him, right?

DAREN BLONSKI CFP®: And if you just start killing everybody, you literally have no one to negotiate with. And now you have 31 districts that are just. Blowing off missiles everywhere. And how are you going to put that genie back in the bottle? You're not. And I think that's the market saying.

DAREN BLONSKI CFP®: And I think what the market is saying is we don't believe anything coming out of Trump's mouth anymore because we don't think this is in control anymore. And I think that's what's starting to go through. But given what we've been through in the past 10 years with COVID and tariffs, all the things like. I never underestimate the power to taco trade this thing. So you never want to be on the wrong side.

DANO WEIR: All right. Sorry, Chris. We took a real, we took a real lesson in there. Do you got, Daren and I got going on our story. You know, we like our stories. Okay. We're having coffee and I like our stories.

CHRIS SIPES CFP®: Yes. Okay. Now we talked a little bit about stocks. We talked about sentiment. Let's talk about interest rates. And this from Bloomberg at Deutsche Bank. Deutsche Bank looked at the 10-year yield during previous sudden oil shocks. This is 1973, 79, 1990, 2022. On average, the yield was up 1% after 220 days. It's up about 42 basis points since February 28th.

CHRIS SIPES CFP®: And this chart was from a few days ago. So it's a little bit stale. But essentially, you can see in past oil shocks. That has sent interest rates up. Why? Because fixed income investors, when you're buying a bond or fixed income instrument, you're wanting to get a return on that money and you have to factor in the value of your money over time.

CHRIS SIPES CFP®: And if inflation is going up, you require a higher return to compensate you for that inflation. And so Wars generally are inflationary and fixed income Markets know that. And so we would expect to see if this continues, we would expect to see interest rates continue to climb, making the cost of money more expensive.

CHRIS SIPES CFP®: Now, you can see the average, which is the dark blue line, and then the red line, which is where we're at today. And, you know, kind of where we are in terms of the days after the oil shock. What's interesting too with this oil shock, we were coming into it with interest rates going down. I think we got just under four on the 10-year right before this happened.

CHRIS SIPES CFP®: I think it jinxed myself. I was in touch with my mortgage consultant saying, hey, we've got rates going down here, Yeah, no.

CHRIS SIPES CFP®: So, but if you look at high yield spreads, so this is another part of the fixed income market, the more what you would call kind of the riskier part of the high yield market. So this is lending to companies that have not the greatest credit. This is the spread over treasuries. And you can see that this is a five year chart.

CHRIS SIPES CFP®: And typically, when you get stress in the market, people are going to require a higher return to lend to companies that are poor credit quality. So that spread is only at 199, or call it 2%, which, as you can see, is not really that high relative to the historical norms. So at least so far, Markets are not pricing in a major shock here in the credit.

CHRIS SIPES CFP®: In the credit Markets. Now, the VIX, I think we'll look at when we look at the charts with Daren, a little over 30 is elevated. So that's the volatility index in the stock market. And definitely the volatility in the bond market is headed up. But in terms of the pricing of that credit, at least so far, we're not seeing a huge impact yet.

CHRIS SIPES CFP®: Now, equities perform well in around half of the stagflationary environments. Worse than other environments, but they should not be ruled out. So equities or stocks, they like low inflation and low growth or low inflation and high growth. Essentially, stocks don't like inflation. But if we do end up getting high inflation, it's not like the returns of equities are horrible. It's just they're not as good.

CHRIS SIPES CFP®: And so inflation, it tends to be a bad a bad environment. For fixed income, especially a fixed income that is not inflation protected. But for equities, at least, it's not a great environment, but it tends to, over the longer term, not be a horrible environment like it is for bonds. Now, we may, if you're looking at, hey, chaos creates opportunities, dislocations create opportunities.

CHRIS SIPES CFP®: We may be seeing a continued shift in the market because despite this turmoil, the small caps in the US at least have held up better than the large caps. And we talked about all that time where the AI mania was happening, that the large caps were getting very expensive, very concentrated. Everybody just was kind of leaving those small caps for dead. Small cap stocks went basically nowhere for about five years.

CHRIS SIPES CFP®: Since the run-up in 21, they were just sideways. And this is from Toby Carlisle. He says, over the last century, the smallest stocks, green, have beaten the biggest stocks, which are in the red, by six times, but not in a straight line. The market has cycled, and the cycles were long. The blue line shows the small versus big market cycles. When the blue line rises, smalls win.

CHRIS SIPES CFP®: When the blue line falls the biggest win the second chart which we don't have here shows the relative sizes of the biggest and smallest stocks so we have just passed this most extreme levels in the last century today's ratio is steer still near all-time highs exceeding the late 1990s.com bubble in the early 2020s meme stock bubble so if you're looking at places where it's like the historical relationships are pretty stretched.

CHRIS SIPES CFP®: The rubber band is very stretched. I would say this is one area to keep an eye on over the longer term.

CHRIS SIPES CFP®: Okay. And last one here, we did talk about the valuations being elevated in the mags, but relative to other historical bubbles, they're pretty tame. So the mags is in the top left. And if you look at the market weight, at 35% and the 24-month forward price-to-earnings ratio at 26.8.

CHRIS SIPES CFP®: Seems pretty paltry to some of these others. The Japanese bubble in 1989 reached a price-to-earnings ratio of 67. Famously, their CAPE reached almost 100, their cyclically adjusted price-to-earnings ratio. Ours was at 40 at the peak here in the US in the dot-com bubble.

CHRIS SIPES CFP®: We look at the tech bubble leaders in 2000, the forward PE was 52. So literally twice what that PE was in the mags most recently. And then the nifty 50 back in 1973, all great companies, some of them still around, some of them not. At the time, Kodak was one of the best, fastest growers in the country, had a forward PE of 43. Does Kodak still exist? I'm not even sure. I don't think it does.

DAREN BLONSKI CFP®: I think the only thing that exists for Kodak is its patents. And there's like an holding company that just gets paid all their patents.

CHRIS SIPES CFP®: Interesting. Interesting. Sears, of course, that one's gone the way of the dodo bird. But 3M, Procter & Gamble, IBM's still around. But anyway, their price-to-earnings ratio got up to 34. But an interesting little tidbit here from the Idea Farm. They say the nifty 50 fell 60% from the peak and then lagged the Markets by more than 30% from 1973 to 1977.

CHRIS SIPES CFP®: If you're looking at the equities and going, gosh, I'm not super comfortable holding things that are expensive and were expensive coming into this, you might look at equities that had a little more reasonable relative values. And if you're going to fall out of a building, it's better to fall out of the first floor than the 10th floor in terms of valuation.

DANO WEIR: AI says Kodak is still in business. Despite recent financial warnings, companies state it's not going out of business, remains operational, continues to produce motion picture and still film.

DAREN BLONSKI CFP®: Now ask how much of its revenue comes from its patents versus actually producing a meaningful product.

CHRIS SIPES CFP®: How much of its revenue comes from patents?

DAREN BLONSKI CFP®: What do you got, Gemini? I guess they could be like... Producing film for movies, but I would imagine most that's digital now.

DANO WEIR: 30%. So like the movie, movie, movie, movies that are trying to go for best picture are still doing film. But yes, you're correct. The majority are doing digital. It says 30% of their revenue comes from patents.

DAREN BLONSKI CFP®: 30%. Yeah. Wow. Well, so I guess it's more of a viable company than I thought, but still 30% is pretty rough.

DANO WEIR: All right. So we've been talking about oil and inflation during Chris's slides. We've got a little bit of a baseball theme celebrating opening day. The third the third leg, the third strike potentially could be a tech sell off. So, Daren, let's go on the Markets. Let's look at the charts and see what exactly did sell off this week.

DAREN BLONSKI CFP®: Wow. There's so many things I could show you this week. Let's let's do this first. And that's.

DAREN BLONSKI CFP®: That's quite the charts down because I think it's kind of overwhelming. So let me get rid of a bunch of these indicators here and then I'll go back to them because I do want to cover them today.

DAREN BLONSKI CFP®: So I start using a different set of indicators when I'm trying to see where that bottoming behavior might be, where things might be basing out with the S&P 500. So you can see this. We had this. We're looking at the weekly chart. So this is the weekly SPY. So this is the largest 500. U. S. -based stocks. From a visual standpoint, it looks like this.

DAREN BLONSKI CFP®: Chris and I have, for years now, been talking about when these guys' big dogs start selling, and it's pretty tough because there's such a concentrated position on the cap-weighted index, right? The cap-weighted index, it gives more credit to the bigger stocks than the smaller stocks.

DAREN BLONSKI CFP®: So what's happening is We're seeing these mag seven really sell off. And you can see mag seven at a rough week in the market. We actually broke below the high right here from this candlestick in 20 of 2024. And just a perfect example, like, you know, when things are screaming high and everyone's portfolios are ripping and I'm making so much money in my mags or whatever, like this is the other side of the coin now, right?

DAREN BLONSKI CFP®: So if you look at Our previous tariff correction from top to bottom here, that was 33% correction when we saw the mags do it last time. And right now we're looking at about an 18, 19% correction from the high.

DAREN BLONSKI CFP®: So because these mags are selling off so heavily, there's not a lot the rest of the market can do to keep things up. And a different way to look at it is RSP. And even RSP looks pretty ugly at this point. But we haven't lost the 50-day moving average. So I'll be watching that green line on the RSP.

DAREN BLONSKI CFP®: We cut through that like a hot knife on butter today or this week on the cap-weighted index, which is generally looked at as the primary market. So where am I watching for support? So great, Daren. That's wonderful. Thanks for making us all feel good about our portfolios today.

DAREN BLONSKI CFP®: What am I watching for support? I'm watching this line right here, this high from... February of 2025. I think that's an important one. This is the daily chart to look at more information. And you can see there is a support zone right in this area here, right around 630 on the S&P.

DAREN BLONSKI CFP®: So then we start saying, okay, well, how oversold is this thing? Because maybe it's just oversold. So there's a couple of different indicators I like to look at. So the first thing actually we'll do before we add those indicators, I'm going to add volume in. So one of the things.

DAREN BLONSKI CFP®: What we want to look for is when we see a bottoming type of market, you tend to see a spike in volume.

DAREN BLONSKI CFP®: This trade from the 20th, that's a pretty good look. You could start maybe making a case that that was the bottom, and I believe we talked about that last week. But then what happened this week is we traded up into that 200-day, and all week long... Amongst all the advisors here at the firm, we were talking, oh, we're going to keep the 200.

DAREN BLONSKI CFP®: We're going to keep the 200. Everybody's all eyes were on this blue line, this 200 day moving average. As some of the traders say, nothing good happens below the 200 day moving average. And that's where we're at. And we did get rejected this week.

DAREN BLONSKI CFP®: That rejection happened. And then Thursday, Friday, the market sold off significantly after that. And you can see though, where it sold into was. This range right here, where there's a lot of buyers hanging out and sellers, perhaps. So 6,300 is looking like a natural support level.

DAREN BLONSKI CFP®: Unfortunately, we didn't see a big spike in volume today, right? So if we had seen this really ugly candle come down and then a big spike in volume, I might start arguing like, hey, maybe that was the bottom. But the fact that we didn't see that, that doesn't make me feel like it is. That maybe we have further to go.

DAREN BLONSKI CFP®: I'd be watching 6,300 as a pretty important support area. So somewhere right around there next week and some basing along that line. If we cut through that, I think there's a lot of buyers that step in around six, at least we get some short-term support around 61 and change.

DAREN BLONSKI CFP®: And that's just because it's corresponding to this high here. So there's probably a lot of people with buys right there. So if we did trade down that, it actually wouldn't be that shocking and would actually be fairly healthy for the market to correct to that point and then rebound upward.

DAREN BLONSKI CFP®: If we lose and go below that, like we've gone below that similar high here on the mags and we went below that high, that's a little more concerning for me. There's a lot of support in this area. So the mags could still go down further and stay called. 53 on this ETF that tracks that. There's support right in here in this D3, 54 zone.

DAREN BLONSKI CFP®: We're not quite in there, but I would think there's buyers hanging out in this area. So I'm definitely starting to look at, okay, where's the bottom? It's starting to feel oversold. And when you start to see things oversold, that can be an indicator. So one of the things we look at...

DAREN BLONSKI CFP®: To help us understand oversold is something called Williams percentage which is an indicator it's a short timers indicator a lot of traders use it and it can usually tell you where there's a bottom so you can see right here when we trade below this 80 percent line you know you're looking at bottom formation and sure enough that was the bottom after the tariff thing and we're down in that area so we're definitely in the zone on the mags where we might be looking for a bottom that's look at what it looks like on the SPY and you can see similar.

DAREN BLONSKI CFP®: This is a very sensitive indicator. So it's used for traders that are trying to, you know, do quick trades in the market. The other one that a lot of people look at to tell us if we're oversold is something called the Relative Strength Index. And when we get below or at this 30 line here, then things are oversold.

DAREN BLONSKI CFP®: But you can see like we've dropped down pretty quick, pretty fast. So what we're looking for now to confirm, we're going to bottom out in the next week, as we're looking for volume, I want to see a volume bar like this right here. You can see that was that bottom where all the buyers stepped in. You can see buyers stepped in right on that Mark there.

DAREN BLONSKI CFP®: Not always a perfect one, but you know, when we, we assess all these different aspects of, we get a better picture of the market. And understanding the probabilities. Because again, at the end of the day, it's all probabilities. On the side of, we're not there yet, Bitcoin did break down.

DAREN BLONSKI CFP®: So that's that front end of the risk curve. And we are just bouncing along the bottom on the Williams and we're down in the 30 round area for Bitcoin. So Bitcoin's that front end of the risk curve, but you can see it can stay in these areas for quite a while before it really rebuilds base and support and then it takes off.

DAREN BLONSKI CFP®: So on the side of, hey, we still got more to go, I would put Bitcoin right now.

DAREN BLONSKI CFP®: Gold finally looks like it might be finding a little bit of a bottom here.

DAREN BLONSKI CFP®: We'll see. The fact that it went up so fast, though, like it's pretty hard to get too excited about much with gold. Let me can these guys because it just puts too much complexity on the charts.

DAREN BLONSKI CFP®: The, all right, let's take a look at 10 years. So this is really the, the, what I would, you know, if there's a few things I'd be watching, it would definitely be the 10 year.

DAREN BLONSKI CFP®: Because this is telling us that there's more inflation in the system. The fact that we have this kind of shooting star pattern today tells you that's kind of a short term topping type of candlestick right there. So I would imagine we'll see some corrections.

DAREN BLONSKI CFP®: So the mortgage folks might get a little bit of relief here. But the fact that we had this upward trend line and we had this descending triangle and we broke out, went above it, wouldn't be shocking to see a test here, but oil would have to really get under control.

DAREN BLONSKI CFP®: And like I was saying, there's a lot of reasons for that not to get under control at this point. And it's a pretty big assumption on behalf of anybody at this point to think they understand how that war is going to play out. I think it's getting past the point of... Where there's really anyone in control.

DAREN BLONSKI CFP®: One thing that I always kind of watched for, and I had this professor at Davis when I was there as an undergrad, and he studied revolution. So he was a consultant on revolutions. And he said, the only way you ever, you can ever tell there's a real revolution is if all the intelligence papers become public, right?

DAREN BLONSKI CFP®: If the intelligence papers don't become public, it's not a true revolution. And so We haven't seen anything like that happening, right? We're certainly killing lots of leadership in Iran, but I think we're far from that. I think the U. S. And Israel are trying to figure out who their puppet can be. And I don't know they've found that person yet.

DAREN BLONSKI CFP®: Actually, the guy they killed last week, who is, I think, Lauren Johnny is his name, was supposedly one of the people they were vetting to be the next dictator puppet.

DAREN BLONSKI CFP®: For Iran but he i guess didn't pass so they dropped a bomb on him anyway i don't mean to make light of that awful situation but that's effectively what's going on so all will all eyes on oil and you can see this big huge candlestick came up today and oil oil just shot up Markets saying nah we don't really think this is going to calm down look like we had this double top forming but it's not looking like that pattern is going to follow through it came down into neckline it held and it's pushing up still so it is Friday it's 2 30 pacific i guess we'll see which what's going to happen now because it seems like all the big stuff that happens is after the market closes on Friday so that's oil we've done Bitcoin we talked about gold it Looks like it's catching a bid or support right here on this line.

DAREN BLONSKI CFP®: Vix is elevated. The fact that it closed above 31 tells us we've got a definite build going on. And that's where I said earlier in the show, where this looks different to me from like the tariff panic we saw in 25. It was just like this lot of volatility really quick, but not a lot of buildup basing to that volatility.

DAREN BLONSKI CFP®: And it calms down really quick. But the fact that we've had a lot of build, build, build, build in volatility, that's making me feel like this could go longer than certainly the politicians want it to. And the fact that when we look at the weekly chart now, this is a pretty clear now, clear rollover and change in direction for the Markets.

DAREN BLONSKI CFP®: At least in the short term, you have to argue that market is correcting. It's in a correction phase. Totally normal. Not suggesting anyone should freak out about their portfolio or anything like that. It's just Markets go up, Markets go down.

DAREN BLONSKI CFP®: And that's why we stay diversified. And that's what's happening. And I'm looking at this 604 range for support. There's also quite a bit of support here in the 620 range. So there's lots of areas we'd stop along the way. But it looks like a more structured sell-off than perhaps we saw during the tariff panic.

DAREN BLONSKI CFP®: Some of the other stuff we've seen where it was these big surprises in the market and then they calmed down. This certainly has a more of a build look to it, which at this point, I'm leaning more towards a 2022 type of correction where we have this slow trough in on some asset classes versus this COVID panic or this tariff panic.

DAREN BLONSKI CFP®: This looks more of like a build, a slow grind on the asset classes. And I think because we've got interest rates that are high, we've got inflation that's still high. I don't think Mr. Welch coming in to run the Fed is going to have a very fun time running the Fed.

DAREN BLONSKI CFP®: He's got some hard decisions to be made, especially when he's got the politicians pounding on him to effectively lower rates. So I wish I had better news. I don't necessarily have better news this week, but I do feel like we are getting into the oversold territory. We can always get more oversold, just like we always...

DAREN BLONSKI CFP®: Tend to go up further than anyone thinks we will tend to go down further than anyone thinks we will but there's a lot of support coming into various asset classes the thing that i i don't know and Chris you probably feel the same but boy this change in bonds is just pretty drastic you know and bonds continuing to correlate with stocks which is frustrating for portfolio managers and then when you look at the move index go ahead Chris well one thing you.

CHRIS SIPES CFP®: Luckily, you mentioned 2022 and probably anybody that held bonds during 22 is having some PTSD like, oh, goodness, are we going back to that again? Well, you never know. But that was the worst bond market in history. And we went into that with interest rates very close to zero coming out of COVID. And they raised the rates. The Fed raised the rates to 5%.

CHRIS SIPES CFP®: Very quickly. Now, it's a totally different situation where we're at today with interest rates in the 5% to 6%, 7% range, depending on what type of fixed income you're invested in. And so we're starting from a, there's more meat on the bone. There's more flesh that, you know, there's more room for error is a good way to put it.

CHRIS SIPES CFP®: Because when interest rates go up, bond prices come down to account for that. And, but, but your starting interest rate makes a huge difference in how severe those drawdowns can be. So luckily we're in a totally different place for, for bonds today than we were then.

DAREN BLONSKI CFP®: So this move index, I think is, this is what we watch, right? And clearly it's telling us there's something underneath the hood that isn't great in that you see that building there.

DAREN BLONSKI CFP®: And to Chris's point earlier in the show where he talked about, you know, these different indicators or this pressure on Trump and you can see interest rates going up. There's a lot of pressure on Trump. But the fact that we haven't capitulated yet and it doesn't seem to be that there's the ability just to now control the situation in the Middle East.

DAREN BLONSKI CFP®: I wonder if it's not beyond his control at this point. And we'll certainly see how the narrative gets shaped over the next few days. But overall, we're definitely in correction phase. It's happening. Doesn't mean you should do anything. It's just like, you know, there's clouds in the sky.

DAREN BLONSKI CFP®: Some days it's cloudy, some days it's blue. And that's just the way life is. And if you keep diversified and stay the course of your strategy, you tend to do better in the long run. We'll leave it there.

DANO WEIR: Yeah, I think that's such an important point to make, Darren, which is that, not to say we saw this coming, because you can never see anything coming, really, but all three of us throughout 2025 were just continually astounded by the disconnection between price of a lot of tech stocks and earnings.

DANO WEIR: And there was just more and more. It was nearing insanity, you know, it was a fever pitch of like, this is all going to be everything. And to the point that like the peak has to be Sam Altman saying that he needs a trillion dollars, you know, federal backed to run his business. We're like, wow, man, you were feeling yourself.

DANO WEIR: And so to us, I think all of us have seen a lot of these things. There had to be a moment where it came back down to earth. And that is why, you know, we. And we tell it like it is. And that is why we preach diversity, Chris, is because, you know, this is it helps offset things like this so that you're not sitting there going like, wow, why was I all in the mag seven?

CHRIS SIPES CFP®: Yeah, exactly. And, you know, unfortunately, diversification tends to work over time in the least exciting way, which is that it's not that it doesn't go down when stocks go down. It's just that it usually goes down less. And so you don't have to, you don't have to make up as much to, to get back to even.

CHRIS SIPES CFP®: So like many things in life, you know, it's not, it's not pain free to get. The thing that you want. There's still pain, just maybe not as much pain. And so it definitely doesn't do it in a way that you're like, wow, stocks are all down several percent today and I'm up several percent. So that feels awesome.

CHRIS SIPES CFP®: You're not hurt as badly. So it's a weird way how that works out.

DANO WEIR: Well, we'll leave it there. Will, will oil inflation and a tech sell-off lead to some changes at the midterm elections? We shall see.

DANO WEIR: We appreciate you checking out the show this far and we appreciate our clients very much. And, if you're new to our firm, we are Sonoma Wealth Advisors. We're the private wealth arm of Fermata Advisors. You can learn more about us at SonomaWealth. Com. Wherever you found this show, whether it's on YouTube, Apple Podcasts, or Spotify, make sure you subscribe.

DANO WEIR: So you won't miss future episodes. You can also find additional podcasts. Our sister podcast, It's All Money, with an amazing episode we just dropped last week about tax-aware investment strategies. Check that out. If you can't find it on our channels, you can always find it at SonomaWealth. Com. We will see you next week, hopefully with better news.

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