Iran ceasefire collapses and defense stocks are catching a bid — go long Lockhee
Thesis
The U.S. military struck over 80 sites in Iran and revoked the waiver that allowed Iranian oil sales, and then Trump publicly declared the ceasefire 'over' — sending stock futures diving. Barron's reports that defense stocks like Northrop Grumman and Lockheed Martin are already rising as investors price in the possibility of a prolonged conflict rather than a quick de-escalation. When geopolitical flashpoints escalate to active strikes and broken ceasefires, defense contractors typically see sustained bid as both real military spending expectations rise and investors rotate money out of vulnerable sectors into stocks that directly profit from the chaos.
Strategy approach
Build a momentum strategy on LMT and NOC using D1 timeframe. Entry: go long when the stock makes a new 10-day high AND the VIX is above 20 (elevated fear). Add position if price closes higher for 3 consecutive days. Exit: trailing stop of 7%, OR if VIX drops back below 16, OR after 25 trading days. Filter: only enter when WTI crude oil futures (CL=F) are in a 5-day uptrend.