How we navigated the Iran war-driven surge in oil that slammed stocks

A surge in oil prices due to war in Iran crushed stocks last week and led to the S&P 500's first three-week losing streak in nearly a year. With nine of 11 S&P 500 sector indexes falling for the week, there wasn't much room to hide. It's no surprise that energy and utilities are winners. International benchmark Brent crude oil and American benchmark West Texas Intermediate crude oil are up over 11% and 8%, respectively, in the last five trading sessions. In fact, on Thursday, Brent broke above $100 for the first time since 2022. Both Brent and WTI briefly rose above $119 on Monday, then pulled back and then rose once again. For the week, the S&P 500 fell 1.6%. Jim Cramer argues that as long as Iran blocks or threatens to attack oil tankers in the Strait of Hormuz, the war will continue and with it more instability. After following developments in the Middle East all week, here are two other themes impacting how we move in the market and our portfolio. How we played As the conflict in the Middle East continues and headlines splash oil everywhere, Jim advised members to stay on their hands for much of the week. He warned against trying to exit the stock market completely during troubled times. It is impossible to know when you will return and risks missing the rally that is sure to happen when the war is over. "Trust me, you're going to put yourself in a tough spot if you sell everything and then have to watch this market recover without you," he said on Thursday's "Mad Money" show. As the week progressed, Jim said it was time to buy because our trusty S&P Short Range Oscillator was oversold. We added to our Procter & Gamble position on Wednesday. In the next session, we prepared a shopping list of five stocks to buy since most of the portfolio is constrained. Even if our hands are tied, we always want to let our members know what we think. On Friday, when we managed to get in on the action, we started chewing on some Alphabet shares. Looking ahead, we believe it is possible for the Oscillator to reach minus-10%, which historically has been a great time to buy. The oversold threshold starts at minus 4%. Stagflation The recent rise in oil prices has clouded the inflation outlook, relegating a series of usually crucial economic reports released this week - February's consumer price index and January's personal consumption expenditures price index - to the status of an afterthought, as they were before the US and Israel attacked Iran on February 28. Inflation will likely rise in the coming months and now investors are worried about stagflation; higher prices with lower economic growth. Some on Wall Street point to the stagflation period of the 1970s as a cautionary tale. At the time, the S&P 500 was down more than 40% in a year due to the recession that accompanied the OPEC oil crisis. These concerns have reduced expectations that the Fed will cut further interest rates this year. In fact, the market is no longer in favor of a 25 basis point cut in September, according to Friday's CME FedWatch tool. Cybersecurity CrowdStrike was among the portfolio's top performers, up 3% for the week. We found even more reason to bolster the cybersecurity stockpile as the Iran war increases the likelihood of attacks on digital systems. "According to CrowdStrike CEO George Kurtz, the increase in cyber terrorism is extraordinary," Jim said during Thursday's Morning Meeting. “You will see many more companies associated with the conflict in Iran being targeted,” Kurtz said in a text message to Jim. “And as the smokescreen of the war continues, China is stepping up its activities. They are paying close attention to what is going on in the war.” Kurtz's remarks came a day after medical technology firm Stryker reported a cyberattack that appeared to be linked to Iran. The club published an analysis outlining three reasons why CrowdStrike is the kind of stock to buy during the Iran war. We have a buy-equivalent 1 rating on the shares and a $500 price target. We also own Palo Alto Networks. We have a $200 price target and a 3-point rating, which means we'll be a strong sell on Palo Alto. Jim is still bullish on Palo Alto, but wants to center the portfolio's cyber visibility around a single name; This name is CrowdStrike. (See here for a complete list of stocks in Jim Cramer's Charitable Trust; it's long.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation's portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. 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