Hedging the Whiplash

Prospero.ai 3/24/26 Trading Letter

Market/Macro Update

Wall Street is grinding through a remarkably choppy Tuesday session. After a sharp initial gap down to start the day—driven by lingering geopolitical jitters and fluctuating oil headlines—equities have spent the bulk of the session steadily climbing back from their morning lows. While the major indices are still flashing slightly red, the heavy selling pressure we saw at the open has largely abated, leaving the broader tape looking fairly flat and resilient as we head into the afternoon. We certainly aren’t out of the woods yet, but the market is refusing to simply roll over.

This relatively “flat” surface is masking some aggressive rotation underneath. Value is the clear winner today across all market caps, as investors cycle out of premium growth names and hunt for stability. From a sector perspective, Energy and Materials are having massive days and stepping up to lead the market, acting as the primary buoy for the indices. Conversely, Tech and Communications are taking the brunt of the selling pressure, acting as the main anchors keeping the broader market from crossing fully into the green.

Despite this impressive intraday climb and stabilization, institutional “smart money” is not rushing to take off its armor. As reflected in our options sentiment data below, the defensive posturing remains heavily locked in. Traders are willing to buy the intraday dips in value and energy, but they are keeping their broad-market downside hedges firmly in place until the geopolitical dust fully settles.