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- Merck & Company (MRK.us) is quietly leading, with bullish momentum, breakout relative strength, and a $30bn+ cash engine funding its next wave of growth, setting up a move toward 125.
- Chevron (CVX.us) is riding the oil shock, outperforming the market with strong momentum, but any pullback could be a buying opportunity as geopolitical tensions continue to support prices.
- Microsoft (MSFT.us) has been crushed and is now deeply oversold, setting up a high-conviction contrarian opportunity as technicals stabilise, while strong cloud and AI growth suggest the selloff reflects sentiment, not fundamentals.

Quick Market Overview

Stocks slipped at the start of the week as early optimism around a Trump Truth Social post on the Iran conflict faded and investors grew wary of rising oil prices and ongoing uncertainty. Gains sparked by President Trump's comments quickly reversed, reinforcing the view that markets are no longer reacting strongly to upbeat headlines without real progress. Continued conflict, alongside concerns about inflation, a softening labour market and AI-related risks, is keeping sentiment fragile.

The VIX As a Contrarian Indicator?

The VIX is commonaly referred to as the market's fear index. It measures expected S&P 500 volatility over the next 30 days, based on options prices. It's quoted on an annualised basis, so a reading of 30 implies roughly an 8–9% move over the next month, not 30% in a year. When investors grow nervous, demand for protection rises and the VIX moves higher, which is why it's often called the "fear index."

However, its current reading may be pointing to a familiar pattern. Whenever fear in the market becomes a little too intense, stocks tend to find their footing. Right now, the VIX is showing signs of that kind of overstretched anxiety, similar to previous moments where the S&P 500 soon rallied afterwards. It suggests that while investors are clearly on edge, that nervousness may already be priced in, creating room for a short-term rebound. That said, this doesn't necessarily signal a full recovery, but rather a market that may be due a pause from the selling and a potential bounce as sentiment resets.

General Equity Market Health (SPX500)

The SPX500 has broken below 6,500, a level that previously acted as key support. In line with the law of polarity, that level now turns into resistance, and any move back toward it is likely to face selling pressure. The market is now trading firmly beneath it, with support seen around 6,300. A break below 6,300 would reinforce the bearish trend that has developed over the past month.

Above 6,500, resistance is layered at 6,710 and then near 7,000, where prior consolidation took place. The overall structure points to a distribution phase that has rolled into a downtrend, characterised by lower highs and building downside momentum.

That said, momentum indicators offer a counterpoint. The Relative Strength Index (RSI) has fallen below 20 and is now into oversold territory. While this does not signal a durable bottom, it does suggest selling pressure may be stretched, increasing the likelihood of at least a short-term bounce as opportunistic buyers begin to step in.

Potential Trade Setups

Although the VIX is signalling a potential contrarian opportunity and the SPX500 looks oversold, we are not yet ready to shift fully into a risk-on stance in the AlphaTrack setups. Caution remains appropriate, as volatility continues to shape market conditions, though we highlight one speculative opportunity below..

Merck & Company, Inc. (MRK.us)

Technical Analysis
- MRK's EMAs have crossed into a bullish formation (black circle).
- The RSI has moved above 50 (black arrow).
- If RSI holds above 50, it signals underlying bullish momentum and should support price.
- This creates a platform for a move toward overhead resistance at 125.
- Underlying support is around the 113 level.
- MRK has outperformed the SPX500, with relative strength (RS) breaking above its previous high (blue arrow).

Caveat
- A break below 113 would be a negative development.
- If accompanied by RSI falling and holding below 50, the bullish signal would be invalidated, indicating a shift back to bearish momentum.

Fundamental Perspective
MRK's outperformance is rooted in something simple: cash flow today and optionality tomorrow. Keytruda remains a $30bn+ engine still growing, but the real story is what comes next. With a looming 2028 patent cliff, Merck is actively reshaping itself, deploying billions into oncology deals and building out a next wave of assets, including its promising oral cholesterol drug enlicitide. The risk is obvious, the company is heavily reliant on one product, but so is the opportunity. In a volatile market, MRK is not a growth chase, it is a transition story, and those are often where the best risk-reward sits.

Chevron (CVX.us)

Technical Analysis
- Over the past month, CVX is up more than 10%.
- The EMAs remain in a bullish formation, suggesting the path of least resistance is still higher.
- Relative strength is positive, with the stock comfortably outperforming the broader SPX500 (green trendline).
- However, RSI is in overbought territory (blue rectangle).
- This points to the risk of a near-term pullback.
- That aligns with a contrarian signal from the VIX and an oversold SPX500.
- Still, as long as the Strait of Hormuz remains effectively constrained and supports oil prices, any pullback in CVX should be viewed as an opportunity.
- Key support levels are worth watching, particularly around the psychological $200 level.

Caveat
- CVX and broader oil majors are benefiting from elevated crude prices driven by disrupted flows through Hormuz.
- If the situation stabilises, oil prices and energy equities are likely to retrace.
- A drop in RSI below 50 alongside EMAs turning bearish would warrant a more cautious stance.

Fundamental Perspective
CVX has become a clean way to express the current geopolitical oil trade, with shares pushing toward record highs as Middle East tensions drive crude higher and inject a risk premium into prices. While the broader market has struggled under inflation and growth concerns, CVX has materially outperformed, up roughly 40% this year versus negative returns for the S&P 500 . The appeal is structural rather than speculative: Chevron combines strong upstream sensitivity to rising oil prices with the stability of an integrated business model, delivering powerful cash flow leverage without being a pure, high-risk bet on crude. In a market questioning growth narratives, it offers something simpler and more tangible, earnings that improve as geopolitical uncertainty increases.

Microsoft (MSFT.us)

Technical Analysis
- MSFT has had a difficult 2026, down over 25% year-to-date.
- However, RSI has moved into oversold territory.
- With a potential contrarian signal from the VIX and an oversold SPX500, MSFT may present a contrarian opportunity itself.
- While this remains a speculative setup, a move out of oversold conditions and a break above the red downward-sloping trendline would be constructive.
- If EMAs turn bullish, with improving slope and separation, and RSI recovers towards 50 or higher, the case for MSFT strengthens.

Caveat
- If RSI remains below 50, bearish momentum is still in place.
- Even with a short-term bounce, the broader bias would remain to the downside.

Fundamental Perspective
MSFT has been sold off, but the fundamentals remain intact: revenue is still growing around 17% and Azure near 39%, driven by strong cloud and AI demand . The weakness reflects sentiment, not deterioration, as investors focus on heavy AI spending and slower cloud momentum despite solid earnings. That has compressed the valuation, even as Microsoft retains strong margins, recurring revenue, and a central role in AI through Azure and OpenAI. In short, the narrative has weakened, but the numbers haven't, leaving the current move looking more like a re-rating than a fundamental break.

Hot News, Cold Logic

According to the Wall Street Journal, President Trump has reportedly told aides he may be willing to end the conflict with Iran even if the Strait of Hormuz remains closed, leaving the complex task of reopening the critical oil route for a later stage. This comes despite an ongoing troop build-up in the region. As such, the development appears preliminary and requires further confirmation, but any stabilisation on this front could help ease pressure on financial markets.

Final Thought

Markets have ended March in the grip of a genuine energy shock: oil has surged well above $100 amid escalating disruption to global supply, driving inflation fears, pushing yields higher and forcing a sharp repricing in rate expectations, while equities absorb a broad and meaningful drawdown.

As March closes, markets are no longer defined by liquidity or optimism but by the reality of a supply-driven shock, yet if history is any guide, it is precisely in these moments of maximum stress, when narratives break and positioning resets, that the foundations of the next durable bull phase are quietly being laid.