Our oil and defense stock trades soar in response to strikes on Iran. How to trade the next move

Today’s issue in preview:

• Our oil and defense stock trades soar in response to strikes on Iran. How to trade the next move

• The strike on Iran drives the bull market in critical resources higher. Four ways to invest in it.

• This high-upside trade on soaring AI power demand is taking off. Are you on board?

• Money & Megatrends continues to crush the market. Pipeline stocks and drone stocks soar to new highs.

Our oil and defense trades soar in response to strikes on Iran. How to trade the next move

Credit: BornaMir

Over the weekend, the U.S. strikes on Iran turbocharged our oil and defense stock trades.

Oil giants ExxonMobil (XOM), ConocoPhillips (COP), and Suncor (SU) are all up 2%+ this morning to reach new highs. Major oil stock ETFs – the Energy Select Sector Fund (XLE), the S&P Oil & Gas Exploration & Production ETF (XOP), and the S&P Oil & Gas Equipment & Services ETF (XES) reached new highs. The big defense stock fund – iShares U.S. Aerospace & Defense (ITA) – reached a new all-time high.

I’d rather benefit from more peaceful trends, but we must trade reality, not personal preference. With reality in mind, here’s how I see the “Iran situation” affecting market trends and how I’m playing it…

Over the past 50 years, armed conflicts in the Middle East have typically generated large, sharp market moves both up and down. Oil typically goes up. Gold typically goes up. The dollar typically goes up. Stocks typically go down.

However, those sharp moves are often short-lived. Usually, markets realize the conflict won’t escalate or at least won’t be apocalyptic, and the moves mentioned above reverse. Prices go back to where they were before. Trends continue their previous trajectories.

That’s why I’m looking to fade sharp moves up or down. They will snap back in the opposite direction in the likely case that the conflict is quick and contained.

That’s my general plan. But keep in mind, crazy things can and do happen in the markets. Keeping an open mind and expecting the unexpected are important parts of an investor’s survival toolkit.

In this situation, Iranian military leaders could hit a major city with a large missile strike. They could intensify attacks on critical oil refineries and pipelines. They could shut down major oil shipping lanes for a week.

I’m not saying any of this will happen. I’m saying it could happen. I’m keeping an open mind.

One important force working in favor of a quick and contained conflict: President Trump and his Republican colleagues absolutelydo notwant a prolonged and messy war that could end up raising gasoline prices.

A prolonged conflict would be horrible for Republicans in the midterm elections. One of Trump’s campaign planks was “anti-war.” Another was “I will lower inflation.” A prolonged conflict is destructive for both.

My long-term view is this: I was bullish on oil and defense long before the U.S. attacked Iran. I will be bullish on them after it’s over. The attack by itself does not support or nullify my stances.

My short-term view is this: Oil and defense stocks are up big today. But these spikes will likely be corrected. Trends will go back to their more conventional behaviors and trajectories.

The White House wants a short conflict, and that’s how I’m trading it. As always, the strategy is subject to change. Let the dice fly high.

The strike on Iran drives the bull market in critical resources higher. Four ways to invest in it.

Credit: William_Potter

Apparently, the market sees the strike on Iran as a good time to remind us that the bull market in critical resources is alive and well.

It’s a reminder that in a world where many critical resources are in high demand and scarce, they will be cause for conflict… and their prices are poised to run higher for years.

As evidence, we present the new all-time high reached today by the VanEck Rare Earth and Strategic Metals ETF (REMX). This fund owns a basket of companies that mine and process critical resources like lithium, tungsten, and rare earth elements.

In a research note last June, I detailed the large financial opportunity related to such critical resources.

The megatrend thesis goes like this: President Donald Trump has staked his legacy and reputation on massively expanding U.S. manufacturing capacity. The Trump & Friends administration is working with business leaders to invest trillions in pursuit of this goal.

However, any plan to increase domestic manufacturing capacity must overcome a big problem: We don’t have the critical resources to build the required infrastructure.

We don’t have the copper, iron ore, rare earths, lithium, antimony, nickel, and other vital building blocks required to build all those data centers… all those factories… all those robots…. all those electric grids… all those power plants… and so on.

To make matters worse, we also lack the refining, smelting, and processing facilities needed to turn the raw forms of those resources into ready-to-use end products. We rely on China for a lot of that.

It’s as if we very much want to build a big house… but we don’t have the lumber, screws, or nails we need to make it happen.

Solving the big “critical resources problem” is possible… and it is an enormous financial opportunity.

To ensure we have the critical resources to build trillions of dollars in infrastructure, the U.S. government will change any law, kill any regulation, and write any check that will increase production and processing capacity.

This means that after more than 30 years of the U.S. government being hostile to domestic mines and mineral processing facilities, it is now supporting them. Trump can’t have his big manufacturing dream without them. This makes the U.S. a giant force in the global scramble to secure critical resources.

Mining investors and entrepreneurs are now operating in an incredible new era… one where the U.S. government is their best friend. It means the critical resource industry will generate dozens of huge stock market winners… helped massively by its powerful, big-spending partner.

Companies such as Idaho Strategic Minerals (IDR) and MP Materials (MP) have the greatest potential for significant upside. Diversified one-click ways to play this megatrend include REMX and the Sprott Critical Materials ETF (SETM).

As you can see in the one-year chart below, this trend is moving. REMX had a strong 2025, spent time consolidating at year’s end, and just broke out to a new high. The strike on Iran drove this price action by reminding us that resources are scarce and often the cause for conflict.

Given this price action, I stand by my original thesis: Partnering with the U.S. government to increase domestic and friendly-country supplies of critical resources will prove to be one of the most lucrative financial activities of this decade.

This high-upside trade on soaring AI power demand is taking off. Are you on board?

Credit: Ron and Patty Thomas

If the global competition to secure oil and metals is going to drive their prices higher, we might as well send the price of natural gas higher while we’re at it.

At least, that’s what the market is telling us today. As you read this, two of America’s largest natural gas producers – Range Resources (RRC) and EQT (EQT) – are trading higher and are at or near new all-time highs.

Dedicated M&M readers will find this no surprise.

On October 2, 2025, I introduced the “bull case” for natural gas. Given AI’s incredible promise, big tech firms like Google, Amazon, and OpenAI are building dozens upon dozens of power-hungry data centers over the next five years. This will drive increased demand for natural gas, which is the preferred clean-burning fuel for many power plants. Growing European demand for U.S. natural gas exports (to be less dependent on Russia) is also poised to be a major driver of natural gas demand.

With this backdrop in mind, some of the world’s top investors have taken positions in major American natural gas producers, including EQT (EQT), Range Resources (RRC), Antero Resources (AR), and Expand Energy (EXE). These stocks could double, then triple, over the coming years as AI and Europe act as strong drivers of consumption.

As you can see from the chart below, the market is warming up to this trade. The stock price of natural gas giant Range Resources is poised to break out of a multi-year consolidation and hit new all-time highs. Soaring demand plus a trend in motion is a recipe for higher prices ahead.

Market Notes

• Our January 12th, 2026, recommendation to invest in the photonics theme is paying off well. Applied Optoelectronics (AAOI) is now up 141% in the last month alone.

• Our recommendation to own pipeline firms continues to pay off. The Alerian MLP ETF (AMLP) reached a new one-year high today.

• Our December 17th recommendation to own stocks in the drone niche is now paying off. Elbit Systems (ELBT) reached a new yearly high today, up 109% in the last year.

• The AI Lawnmower continues to cut down software stocks. Duolingo (DUOL), Upstart (UPST), and Root (ROOT) all hit yearly lows today.

Regards,

Brian Hunt
Editor, Money & Megatrends

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