SPX broke above our line in the sand at 6870 on Monday. As I mentioned in the desk note on 04/14, there were no longer any signs of bearishness: VIX backtested and was rejected by the major trendline, DXY remained below 99, yields were down, oil was down, and bellwether sectors were leading to the upside. The move that followed the clean break above the key 6870 level was fierce to the upside. I think we’ll see some pullbacks from the 7200 area next week. Despite the rosy tape and headlines suggesting we are getting close to a peace deal and that the Strait is open, with price going vertical, I would advise caution going forward. I stand by my view that a peace deal will be very hard to reach, as Iran will not give up control of the Strait or its nuclear program. Ship traffic through the Strait remains low, and Iran still decides which ships can pass. Our monitors show that the majority of ships made U-turns after attempting to cross the Strait following Trump’s claim that it had reopened. In war, the side that can endure more pain tends to prevail, not the one that can inflict more of it. Equities have rallied hard, oil has been dumped, and yields are back below levels where Trump could pull another wildcard to manipulate the market again. As price goes vertical, stops are paramount to protect your profits.

Similar to SPX, NDX showed strong upside momentum after breaking above the key resistance on Monday.