Thursday Bought Peace And A Rate Hike. Iran Wants A Refund.

Market Snapshot

Futures nudged up at the open and then settled back into the meh zone, so there is not a great deal to read into the premarket itself. The bigger tell is the VIX ticking up on the weekend’s chaos, and crude doing a full round trip: a pop back above $80 on the Hormuz headlines, then a slide back to where it started.

• ES (S&P 500): 7,563.50 / -0.15% / back inside the recent range, meh
• YM (Uncle Dow): 52,021 / -0.06% / unchanged
• NQ (NazQuack): 30,743.25 / +0.05% / holding below its NATHs
• RTY (Uncle Russell): 2,999.5 / +0.02% / pressing the top of the range
• GC (Gold): 4,227.8 / flat / firm after the pre-open pop
• CL (Crude): 75.30 / -0.29% / round-tripped above $80, then back
• VIX: 17.41 / +6.09% / ticking up on the weekend chaos
• BTC/USD: 64,100.71 / +1.37% / slow-stepping the 65k zone

SPX Analysis

The decision to keep the bears on a tight leash was exactly the right one. The short-term bear move came to fruition just as we wanted. The development work to build that very decision into the software is coming along, and all being well it gets published this week. From here, a push above the 7,580 level will trip the continuation signal I mentioned last week.

Bear came good; above 7580 trips the continuation.

RUT Analysis

Uncle Russell continues to be the easier read, thanks to those clear consolidation levels. Price peekabooed out of the range for a brief bear appearance and then pushed quickly back inside. A move above, into a new all-time high, could send Russell ripping. As usual, until that happens and something new develops, the same thing is likely to keep playing out.

Peekaboo and back in; same thing until something new.

/CL – Crude

Crude popped a little higher outside regular hours, last week and again this week, and it is developing what some would call a head and shoulders. Price is stalling at the 10th of March lows, that old support now acting as resistance. If this level gets reclaimed and holds, the rising channel that held for many weeks could evolve into a more sideways consolidation. Otherwise, a trip down to the breakout target we looked at last week, around $65, is still very much on the table.

Reclaim and hold, or it’s a trip to 65.

/GC – Gold

Gold has already handed me a lovely little profit before the open. My initial early bull swing spread is still a touch underwater, but time is on my side. The speculative bull spread I put on off the retracement zone, for the higher low I was talking about last week, turned out to be a little lower than anticipated. Either way, that one has pushed higher into a profit and derisked the earlier mistimed spread. The %R is now in a bull extreme, so we could well see a nice push higher, ideally toward the $4,400 level in the short term and the $5,000 level in the big picture. It is looking like we may be carving out a range between roughly 4,100 and 4,400, much the same way I was framing the 4,100 and 4,900 levels on the bigger picture.

Bullish, taking profits, eyeing 4400 then 5000.

BTC

Bitcoin is slow-stepping its way around the 65k level, and as new information arrives the patterns keep evolving. For the moment this looks like a channel. We already knew this zone was a range, it is simply mutating into different named patterns. It is the same point I made last week about why I rarely care what the pattern is called: the names change and mutate, and we only really know what it was after the fact. In real time all we have is a best guess, and that best guess is constantly changing.

Slow-stepping 65k; the pattern keeps mutating.

Expert Insights

The statistician George Box gave traders a line they should tattoo somewhere visible:

“All models are wrong, but some are useful.”

That is the whole of the bitcoin read above, and most of the others too. Channel, range, head and shoulders, cyclical bull turn, the label is just a model, and every model is wrong the moment the next candle prints. Chasing the perfect name for a pattern is a fool’s errand, because the name only settles once the move is over and the money is already made or lost. What matters is whether your current best guess is useful enough to hang a setup on, with a defined risk if it turns out wrong. Box was not a trader, but he understood the job better than most: be roughly right, stay useful, and never marry the model.

Fun Fact

Since a UK Prime Minister has just handed in the keys, spare a thought for the benchmark they were measured against.

Liz Truss holds the record as the shortest-serving Prime Minister in British history, lasting just 49 days in 2022.

She was so famously outlasted by a 60p Tesco lettuce, which the Daily Star livestreamed beside her photo to see which would wilt first, that the lettuce was eventually archived by the British Film Institute for the nation.

The bar for a long premiership, it turns out, is salad that has not yet turned.

[Source: Wikipedia, “Liz Truss lettuce”, and the BFI National Archive]