Markets React to the Iran Developments: How to Trade it. 7/8/26

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**Scott Wapner** (1:01)
Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the Momentum Mess. Whether it is any closer to a bottom, we will ask the committee how to trade the markets. Joining me for the hour today, Joe Terranova, Liz Thomas, Jim Laventhal. We're in Talkington. We will show you what we're doing here in the markets today where we're just about at the lows of the session. Certainly for the Dow, which is off by one and a half percent. You do have oil up sharply today. President saying that the ceasefire with Iran is over. In fact, more on that because the president is expected to hold his news conference at the NATO summit anytime now. And when we do see President Trump, we're going to take you live to Turkey, at least to start things off today. But we'll talk to the committee before we get there, Joe. The real story does remain this momentum unwind. Goldman says the five-day unwind now worse than COVID. It's the same places we've been looking. Chips, some of the AI adjacent names.
Caterpillar, for example, was lower earlier today.
Micron now at risk of falling out of the trillion-dollar market cap club. That's a story in and of itself. Sort of tells you where that trade has been of late. And just bear in mind that I may interrupt you at any moment for the president.

**Joe Terranova** (2:14)
Yeah. So I think in the last several days, the momentum factor has been leading the market and fostering an internal rotation.
I think it is safe to say that enough deleveraging has occurred in the momentum factor. However, the momentum factor will be vulnerable to further downside if, in fact, the overall market and the Middle East tensions flaring up once again were to take equity prices down. So, it would not be isolated to the factor itself, it would be more of the market. But I do think we're close to the bottom, certainly as it relates to names like KLA Corp, Lam Research, Applied Materials and Micron.

**Liz Thomas** (2:55)
Liz? If we're talking about just semiconductors, I think there's more-

**Scott Wapner** (2:59)
We're talking about everything. I mean, anything that's been in the momentum area, semis are the most high-profile.

**Liz Thomas** (3:06)
Yeah.

**Scott Wapner** (3:07)
But like I said, it's the AI power names, it's the caterpillars, it's sort of anything in that orbit has been the thing that's been the most upset, and it doesn't appear that it's stabilizing anytime soon.

**Liz Thomas** (3:24)
Yeah. I'm probably a little less optimistic than Joe at this particular moment. I think that semiconductors in particular have more downside to go.
Everybody's freaking out about the drawdown that they've experienced already, but we quickly forget that they were up over 100 percent coming into this. And then transition to looking at something like South Korean stocks, you've got the Cospi in a bear market right now, closed in a bear market for the first time, actually entered a bear market intraday on July 3rd. So when you're looking at that trend and just the momentum unwind across the globe, you have to decide whether or not it's rotating into other places in the equity market, or it's coming out of equities entirely.
I don't think it's coming out of equities entirely. The beneficiary of the South Korea unwind, for example, has been China. So there's buying opportunity there. In the US, I think the beneficiaries continue to light up as health care and some of the other spaces that can provide growth opportunity. So I do think that some of this momentum still has more flush to go, but I don't think that this is the beginning of a large bear market in the US.