War, Oil, and the Week That Broke the Rally

TL;DR

The S&P 500 fell 1.6% to yearly lows as Iran closed the Strait of Hormuz, oil touched $100, and the market's three-week losing streak deepened. Both THOR models remain fully invested - the Index Rotation model holds the Dow and S&P 500 while the Low Volatility model is loaded into energy, materials, and other sectors that are directly benefiting from the crisis. Risk Gauge sits at 7 - Bullish.

Week in Review

Three straight weeks of selling. The S&P 500 closed at 5,638, down 1.6%. The Dow dropped 2.0%. The Nasdaq fell 1.3%. All three indexes hit their lowest levels of 2026.

The story of the week was Iran.

The Strait of Hormuz - roughly 20% of global oil flows - went from 91 ships transiting on February 28 to four on March 8. Iran declared it closed to U.S. and Israeli vessels, but in practice, insurers pulled coverage and commercial tankers stopped routing through entirely. Brent crude settled near $100 a barrel. U.S. gas prices jumped, with the national average crossing $3.67.

The White House responded by waiving sanctions on Russian oil imports to stabilize supply - a move that would have been unthinkable six months ago. Treasury issued 30-day OFAC licenses for Russian cargoes already at sea. The message: energy security matters more than the sanctions regime right now.

Gold pushed through $5,100 an ounce. The 10-year yield held steady as traders weighed inflation risk against flight-to-safety flows.

Energy stocks - up 25% year-to-date - were the clear winners. Everything else took a hit.

Allocation Changes

No changes this week. Both models remain fully invested.

The Index Rotation model holds the Dow (49%) and S&P 500 (49%) with minimal Nasdaq exposure. The QQQ weight is below 1% - essentially a risk-off signal on tech-heavy growth that's been in place for weeks.

The Low Volatility model is spread across seven sectors, with energy (16.3%), materials (14.8%), and industrials (14.2%) at the top. The defensive skew - consumer staples, utilities, healthcare - rounds out the balance. Tech (0.4%), real estate (0.3%), and financials (0.3%) are at de minimis levels.

This is a portfolio that was positioned for exactly the kind of dislocation we're seeing.

The Bigger Picture

Three dynamics are converging right now.

First, the oil shock is real. This is not a one-week blip. The Hormuz closure disrupts shipping lanes, insurance markets, and global supply chains simultaneously. Even if the military situation stabilizes quickly, the knock-on effects - higher diesel, elevated shipping costs, refinery margin compression - take months to unwind.

Second, the market rotation that started in January is accelerating. The equal-weight S&P 500 is up 4.5% year-to-date while the cap-weighted index struggles. International stocks are outperforming. Energy and materials are leading. Emerging markets are posting double-digit gains. The Magnificent Seven trade is unwinding, and capital is flowing toward sectors with direct earnings exposure to the current environment.

Third, the policy response is creating its own uncertainty. Waiving Russian oil sanctions, potential OPEC+ output increases, and Federal Reserve rate cut signals are all happening at once. Each is designed to stabilize, but together they inject unpredictability into every asset class.

For THOR, the signal processing is clear: stay invested, stay diversified, favor sectors that benefit from elevated commodity prices and avoid concentrated tech exposure. The system was designed to detect regime changes, and this is one.

THOR Risk Gauge

Bullish

Both models fully invested with broad equity exposure. Energy and materials overweight reflects confidence in the commodity cycle. Near-zero cash across both funds.

Signal Watch

THOR Index Rotation - As of March 13, 2026

THOR Low Volatility - As of March 13, 2026

Weekend Reading

Latest from Behind the Ticker: Sean O’Hara – 4x S&P Income Without Covered Calls. O’Hara, President of Pacer ETF Distributors, explains how QDPL delivers 400% of the S&P 500 dividend yield while preserving full upside – no covered calls, no leverage. A sharp breakdown of dividend futures, tax efficiency, and building income without capping growth. Listen on Spotify

Reads worth your time:

• Navigating the 2026 Energy Crisis: Beyond the Headlines - Alvarez & Marsal argues that companies relying on crisis management instead of strategic energy resilience will get punished. Relevant right now as the Hormuz closure exposes who prepared and who didn't.

• 2026 Outlook for the Energy Sector - Gabelli Funds - Deep dive on global crude demand, oilfield services tightening, and why offshore/deepwater spending will top $35B annually through 2030. Explains the structural story underneath the geopolitical headlines.

• Report to Congress on the Iran Conflict and Strait of Hormuz - USNI's summary of the Congressional Research Service report on the military situation, shipping disruptions, and oil market impacts. The best single-source overview of where things stand.

Quote of the Week

"The stock market is a device for transferring money from the impatient to the patient."
- Warren Buffett

Brad Roth
CIO, THOR Financial Technologies

This content reflects the opinions, analyses, and research of THOR Financial Technologies as of the date published. It is provided for informational and educational purposes only and does not constitute investment advice and should not be relied upon as the basis for any investment decision. Past performance doesn't guarantee future results, and all investments involve risk. For more information, please go to: thorft.com