There's no doubt that the U.S. and Israel's joint strikes on Iran threw a wrench into an already tense market... Now, you might be thinking that oil and defense companies would immediately benefit from this new conflict.
This 'Surprising' Stock Beat Oil and Defense as War Kicks Off
By Vic Lederman, publisher, Chaikin Analytics
There's no doubt that the U.S. and Israel's joint strikes on Iran threw a wrench into an already tense market...
Now, you might be thinking that oil and defense companies would immediately benefit from this new conflict.
You would be right. But that's not the whole story...
In the Power Gauge, we track the performance of oil producers through the State Street SPDR S&P Oil & Gas Exploration & Production Fund (XOP). And we track the defense industry through the State Street SPDR S&P Aerospace & Defense Fund (XAR).
After the first strikes over the weekend, XOP surged by nearly 4% on Monday. Meanwhile, XAR jumped by more than 2%.
The Power Gauge rates both XOP and XAR as "very bullish" right now. So there's more room for these funds to grow as the fight drags on...
However, I noticed that a particular stock jumped by more than both of those funds on Monday. It grew by more than double the gain of XAR. And it has kept ticking higher this week.
After the recent carnage in the space, some folks might be surprised to hear that this company is in the software industry...
In 2022 – when the Russian invasion of Ukraine shocked the world – Greg Diamond recommended a trade that returned 116% in 34 days... and another trade that soared 100% in 17 days. Now – as the U.S.-Iran conflict wreaks havoc on the global economy – how is Greg leveraging this market turmoil to benefit folks? Find out at the 2026 Market Crash Summit.
If the most successful investor ever tells you to buy a specific stock... do you? Because if you'd given Warren Buffett just $50 back in 1965, you'd be sitting on more than $2.5 MILLION today. What if you knew which stock he was buying next?
Developing Lethal Software
Folks, I'm talking about Palantir Technologies (PLTR).
And if you know anything about Palantir, you'll know why this is the case...
You see, Palantir develops a software platform called "Gotham." And its page on the Palantir website leaves nothing to the imagination...
It starts with big text that says, "Your software is the weapons system."
Put simply, Gotham is an AI-powered operating system for "global decision-making." And it aims to give its users "AI-driven combat superiority."
This software is intensely efficient, folks...
It allows U.S. troops to identify targets on the ground for strikes faster than their minds can work.
It took 2,000 personnel to complete the targeting work for the American-led invasion of Iraq in the early 2000s. Today, that work can take only 20 soldiers using Palantir's Gotham software.
That means one soldier is now 100 times more efficient than they were in Iraq.
This is an impressive feat, to be sure.
Gotham isn't a new software. But with the huge wave of U.S. strikes on Iran, we're now seeing its use on a large scale.
And considering the gains in the stock over the past few days, more investors are realizing Palantir's software is more than "just" software...
It's an AI-driven weapon system.
So let's see what the Power Gauge has to say about the stock now...
At that point, our system just flashed its first sell alert in more than a year for the stock.
But that wasn't the only headwind Palantir faced...
As 2026 kicked off, the stock's relative strength versus the S&P 500 Index had slipped into the red. And it continued sliding lower.
Just a week into January, Palantir's Chaikin Money Flow indicator – which tracks the smart-money activity on Wall Street – also went negative.
Even with strong full-year earnings results for 2025, the stock's downward trend continued.
You can see this action in the chart below...
I wasn't surprised by this fall, folks...
The Power Gauge had downgraded Palantir from a "bullish" overall rating in early November. And the technical picture continued to get worse.
But as I said earlier, Palantir has rallied due to the new conflict raging in Iran...
The stock surged nearly 6% on Monday – the first day the markets opened after hostilities started. By now, it's up nearly 12% from Friday's close of $137.19 per share.
Now, an influx of "smart money" led this surge. You can see that in the first panel below the chart.
But in the second panel below the chart, you'll also notice that the spike in the stock pushed it deep into overbought territory. So it could be ripe for a pullback after such a big, quick gain.
And the Power Gauge still gives Palantir a "neutral" rating right now. So it remains cautious on the stock.
Of course, Palantir could also find itself tumbling down again if the war in Iran stops as abruptly as it started...
Putting it all together, our system says there are safer opportunities than Palantir in the markets right now.
And as always, we'll keep using the Power Gauge to find them.
Good investing,
Vic Lederman
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.46%
7
18
5
S&P 500
+0.71%
114
285
99
Nasdaq
+1.52%
22
49
29
Small Caps
+0.97%
558
974
350
Bonds
-0.31%
Consumer Discretionary
+1.78%
3
22
23
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain somewhat Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+2.41%
Communication
+1.97%
Real Estate
+0.74%
Industrials
+0.21%
Utilities
-0.19%
Health Care
-0.49%
Consumer Discretionary
-0.6%
Financial
-0.71%
Consumer Staples
-2.08%
Materials
-2.15%
Information Technology
-2.22%
* * * *
Industry Focus
Software & Services
9
72
57
Over the past 6 months, the Software & Services subsector (XSW) has underperformed the S&P 500 by -22.23%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #20 of 21 subsectors.
Indicative Stocks
ABTC
American Bitcoin Cor
AGYS
Agilysys, Inc.
AI
C3.ai, Inc.
* * * *
Top Movers
Gainers
MRNA
+15.99%
COIN
+14.57%
APP
+10.01%
ANET
+8.21%
HOOD
+8.07%
Losers
BF.B
-6.65%
RCL
-4.68%
ROK
-3.8%
CPB
-3.69%
ROL
-3.61%
* * * *
Earnings Report
Earnings Surprises
VEEV Veeva Systems Inc.
Q4
$2.06
Beat by $0.12
AVGO Broadcom Inc.
Q0
$2.05
Beat by $0.03
BF.B Brown-Forman Corporation
Q3
$0.58
Beat by $0.11
* * * *
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