VRA Investment Letter: Structural Bull Market & Bullish Macros. Latest on Iran.
/Good Thursday morning. We’re seeing important technical and fundamental…and yes, contrarian indicators that point to a near-term “sharp” move higher in the markets and a continuation of this generational bull market. Our call from Monday was that the Monday lows would be THE lows and on a closing basis, that’s exactly what we’ve seen, as each day's closing prices this week have been above the intraday lows on Monday. “When fly, stocks are a buy” has held up, so far.
Following the initial attacks against Iran on Saturday, on both Monday and Tuesday the markets opened sharply lower, followed by major reversal rallies higher. Yesterday saw a good open followed by another strong afternoon rally. The repeating pattern of the week is that buyers have come rushing back into stocks, a repeating pattern that we want to see continue. We expect that it will.
Why have we remained buyers, adding to our positions this week? Because for the last 3 + years this has been a structural bull market…the most powerful kind…driven by surging corporate earnings & margin expansion that will only continue to move in one direction…higher. Combined with our "Big 3" of the Trump Economic Miracle (this is the first year the 1BBB will be 100% in place), the Innovation Revolution and an absolute ocean of liquidity, we simply have more reasons to be bullish than bearish.
As we start trading today, markets are lower, so let’s see if buyers come rushing in again. Of note, overnight every Asian stock market was solidly higher, a surprise to many as China has begun rationing their energy reserves. In just the last few months China has seen the majority of their oil imports (from Venezuela and Iran) cut markedly. Most thought the China news would hit the emerging markets. Many are saying that this is another sign of Trumps "4D chess".
Bottoms can be messy, but with the S&P 500 just 2% from ATH’s and with multiple equal weighted equity indexes trading right at ATH’s, we expect this rotational bull market to begin flashing signs of a reversion to the mean. And that means the strength in software/tech/momentum stocks and Bitcoin/TAO should continue to build. Our FIFO theme remains firmly in place...and that’s a buy signal.
Bullish Macro Setup
The VRA Investing System remains at 10/12 screens bullish. While wars are ugly and scary, with volatility and wide market swings that may remain in place until much of the Iran uncertainty dies down, at 10/12 screens bullish we remain long and strong.
- February is typically weak, while March and April are two of the strongest months of the year. Remember, we’re now just 19 trading days from the end of Q1. We expect the markets to continue front-running bullish seasonality and announcements of Q1 earnings.
- Investors are hedging against an S&P 500 drop at a record pace. Estimated S&P 500 “put-delta” positioning is down to -$55 billion, the most negative reading since at least the Great Financial Crisis. This means investors are currently holding the largest dollar amount of S&P 500 put options (protection) ever. This exceeds the 2020 plandemic crash, the 2022 bear market as well as the April 2025 tariff mania selloff. Wall Street has rarely been this fearful.
- a Dow theory buy signal is in place. When both the industrials and transports are hitting ATH’s together this has been a classic buy signal. Few are talking about the strength in the trannies, but as seen below, the DJ Transportation Index is up 27% from its late-December lows. We’re seeing all of the classic signs of a rebirth in trucking and since we know that housing isn’t driving it (not with rates this high), there’s just one primary reason for the strength; a rebirth in domestic manufacturing, thanks to Trumps tariff and economic polices. That means job creation and economic growth.
- We continue to expect the US economy to soon hit 5% GDP growth.
- As tough as the markets have traded over the last several weeks, how remarkable is it that the median stock in the S&P 500 was up 4% for the month of February with gains of 7.8% so far in 2026. You’re likely not hearing that from the financial media and/or their favorite permabears. In addition, the advance-decline line for the S&P 500 closed at its highest level in history on Friday. The action beneath the surface continues to flash buy signals, which is why the VRA Investing System remains at 10/12 screen bullish.
- Corporate earning and margins continue to expand, in what is a near parabolic move higher. This is what the markets, and the economy, ultimately follow.
- The semis have consistently led higher from the 4/7 tariff mania lows; a highly reliable buy signal for the rest of the market.
We see this ongoing strength in the semis below, which have consistently led the markets higher from the 4/7 tariff mania lows. Today, this relative strength chart of the semis to S&P 500 is once again bouncing off a bullish supporting trend line.
- Bitcoin bottom. We see the 2/5 lows of $59,700 as the lows for this correction. Remember, in the past when BTC has had a 50% correction, over the next 12 months the average return has been 125%. Bitcoin is a risk-on signal and has jumped 22% from its recent lows.Technically speaking, BTC is now in a new bull market.
- Gold & silver continue to flash risk-on signals. Were precious metals in a downtrend instead of a rock-solid uptrend, this would be an indicator of poor market liquidity. Below we see golds 183% move higher of the last 2.5 years. Zooming out helps to make sense of short term volatility. The higher trend of gold, silver and miners remains firmly intact. Our two VRA 10-bagger gold miners, where we have combined gains of approximately 1000% (learn more at VRAletter.com)
VRA Bottom Line: it’s all about recognizing the primary trend is vs the counter trend, specifically with the US economy and equity markets. Our call remains; US GDP growth will soon surpass 5%. We’re seeing it now in transportation & trucking and in corporate earnings & margin expansion, with green shoots pointing to a “boom” in US manufacturing & economic growth. Dips like this will prove to be a gift.
Latest on Iran
The markets are telegraphing that this war won’t last long, with the winners already known. It’s Iran vs most of the rest of the world and unless they’ve lost touch with reality, they should be looking for a near term off-ramp. Oil prices, the USD and the VIX Index will continue to be give us our best clues and we’ll to key off of software/tech/momentum stocks and bitcoin as our "FIFO rotational indicators". FIFO didn’t fail us yesterday either, as IGV (Software ETF) and Bitcoin both traded solidly higher (IGV +1.5%, Bitcoin +7%).
Until next time, thanks again for reading.
Kip
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