Since November 2016, the Dow Jones Industrial Average has exhibited a distinctive and repeatable structural behavior: every significant correction has terminated at or within a few percent of a prior structural high, with the sole exception of the 2020 COVID low (which instead halted precisely at the November 9, 2016 election night low — itself a politically significant price point). Across four separate episodes spanning a decade of wildly varying macroeconomic conditions, the same geometry keeps appearing.

The record is remarkably consistent: Four corrections, four prior-high reversals, precision that grows tighter over time.

1. The March 2020 COVID crash bottomed at 18,214, within 0.2% of the 18,253 election night lows.
2. The October 2022 bear market bottomed at 28,661, reversing within 3% of the February 2020 pre-pandemic peak of 29,569. If the June lows had held, that would have been within 0.2%.
3. The April 2025 tariff-shock correction ended at 36,612, within 0.9% of the January 2022 prior all-time high of 36,953.
4. The March 2026 correction halted at 45,057, only .04% from the December 2024 high at 45,074. [See: It’s TACO Monday.]

What makes this pattern particularly difficult to attribute to fundamentals is the variety of the macro backdrops. The 2020 reversal occurred during an unprecedented liquidity injection amid a global pandemic. The 2022 reversal happened mid-way through the most aggressive Fed hiking cycle in forty years, with inflation at 9%. The 2025 reversal followed a surprise tariff shock. The 2026 reversal coincided with soaring oil prices during the war with Iran.

If fundamentals were the governing force, the reversal levels should be scattered across a wide range of prices reflecting differing earnings expectations, discount rates, and risk premia. Instead, they cluster precisely at prior structural highs — technical levels that have no inherent fundamental significance.

The companion VIX behavior reinforces the anomaly. In each case, vol exhibited a distinctive signature at the reversal: a simultaneous break of two independent technical structures on 2016 election night; a controlled descent from a rising trendline ceiling in 2022; a 44.1 spike precisely sized to deliver an overdue backtest in 2025; a pre-positioned lower high at the March 2026 equity low followed by a 40% crush through the 200-day moving average. These are not the vol signatures of random news-driven selling exhausting itself at arbitrary levels. They are vol signatures consistent with coordinated positioning around specific defended price zones.

The odds against such an outcome are very long indeed. Assume the DJIA trading range between 2016 and 2026 spans roughly 18,000 to 50,000 — a 32,000-point range. The probability of a random reversal landing within 3% of a specific pre-identified prior high is approximately 6%. The probability of four independent reversals all landing within 3% of pre-specified prior highs, under a null hypothesis of fundamental price discovery, is roughly 0.06⁴, or approximately 1 in 77,000. Even relaxing the tolerance to 5% only brings the joint probability to about 1 in 10,000. It doesn’t prove market manipulation, but it certainly rules out “coincidence” as a viable explanation.

Ironically, the biggest tell is that the pattern operates on the DJIA — a price-weighted, 30-stock index that professional investors ignore — rather than the S&P 500, where institutional capital, derivatives liquidity, dealer gamma, systematic flows, CTA positioning, and vol-centered strategies live.Why the Dow?

There’s no doubt that the DJIA is the index that populates political rhetoric, newspaper headlines, and presidential talking points — suggesting that this function is calibrated not to professional positioning but to preserve a specific narrative: Everything is alright. Nothing to see here. Move along. Trump has posted on social media or given speeches or interviews over 800 times in the past month. When he wasn’t posting about the incredible ballroom, he was posting about the Dow or the stock market — even as more consequential topics were on our minds.

We’ve discussed countless times the means by which markets can be manipulated. The list of likely suspects is fairly short: the Treasury’s Exchange Stabilization Fund (ESF), the Plunge Protection Team, the Fed, the Treasury’s Office of Debt Management. All except the Fed are headed by Treasury Secretary Scott Bessent, a man with ample financial sophistication, hedge fund experience, and loyalty to his boss. We can assume that the appointment of Kevin Warsh to Fed Chair will only strengthen Trump’s ability to dictate market outcomes — at least so far as the Dow is concerned.

Stay tuned...

 

 

Futures are off slightly after another overnight ramp job and an uneventful initial claims print.

Although VX and VIX have yet to commit to an equities outcome…

…CL and RB are back at nosebleed levels…

…and DXY is back above its SMA200 after bouncing off the bottom of its rising white channel.

Some have questioned why the BoJ isn’t trashing the yen as they often do to boost stocks.

It’s very straightforward: they can’t afford to.  They’ve needed a relatively strong yen to bring down inflation…

…which has driven interest rates to historically high levels – at least by Japan’s standards. When you have debt/GDP of over 230%, even 2.5% is a disaster.

 

The US debt/GDP is considerably lower, but at 125% is still problematic – especially with a $2 trillion annual deficit.

 

 

continuing…

Futures have regained about half of yesterday’s losses which resulted from continuing uncertainty around the ceasefire in Iran. The pattern of overnight “repairs” continues.

 

VIX remains on the bubble, in position to save the market when needed.

But, oil remains the most important determinant of market direction.

Retail sales reportedly increased 1.7% MoM and 4.0% YoY in March due largely to a 24% surge in the price of gasoline and an increase in automobile purchases due to incentives being offered.

Stanford’s Institute for Economic Policy Research estimates that the price spikes have driven Americans’ annual gasoline expenses $857 higher, easily outpacing the $351 increase in average tax refunds from Trump’s signature tax legislation which had been billed as promising $1,000 refund increases.

Even with the surge in gas prices, economists believe consumer spending has slowed since 4Q2025’s 1.9% annualized rate. Atlanta GDPnow estimates 1Q2026 growth at only 1.3% nominal.

Futures are 30 points lower than their overnight highs, ticking lower during Trump’s unhinged interview with CNBC. Among other interesting quotes, Trump said he thought the market would have been down 20% following an invasion of Iran.

Oil prices are stable…

…and 10Y yields are slightly higher.

Just like that, the Hormuz Strait is closed once more amid squabbles between two very unstable regimes.

ES has reached two of the three Fib extensions detailed last week, so there’s a good chance that the modest decline seen over the weekend is the start of the much-needed backtest.

WTI is up only modestly, but the squeeze on global flow matters more than whether the futures price is 85 or 95.

Prices elsewhere are all over the map.

We’ll get retail sales and pending home sales tomorrow and initial claims on Thursday. So,  the 10Y could see increased volatility this week.

Iran has reportedly announced that the Strait of Hormuz has reopened, sending the price of oil tumbling by over 10%…

… and SPX futures sharply higher.

At 7143, however, ES has run into the first of three consecutively higher Fibonacci extensions: the 3.618 of the COVID crash.

The others are the 2.24 of the 2022 decline at 7186 and the 1.618 of the 2025 tariff correction at 7272.

The highest level of overhead resistance, therefore, is only 1.8% above the current price.  Given that we still face an inflationary oil shock that has dashed expectations of a rate cut in 2026, there is still plenty of risk for a relatively meager upside.

SPX has already topped its equivalent Fib targets, so its overhead resistance is less well defined. Note, however, that it is not only overbought but that its RSI has run into a TL of resistance (below, in yellow) from July 2024.

VX is still off its recent lows and remains above its SMA200…

…but VIX itself has sunk below its SMA200 – at least for the moment. Today marks the third session in a row where it has straddled this important support, leaving us unconvinced that this morning’s rally has staying power.

The factor, of course, is Trump’s social media post that the US blockade is still in force.

Ladies and gentlemen, we have froth. When a sneaker company circling the drain merely announces that it’ll become an AI company and sees its market cap increase from $21 to $148 million, the market has officially become frothy.

It makes just as much sense that the S&P  500 made new all-time highs yesterday. It’s not just “climbing a wall of worry” as the talking heads like to say. It’s flat out ignoring some of the biggest ever macroeconomic threats to the economy in every corner of the world, brought to you by a guy who fancies himself the Lord and Savior.

 

For the record, VX is still bouncing…

…and CL – with only Trump’s bloviating to suggest the war is over – is still trading in its 90s.

Where this market goes is anybody’s guess. But, between the froth, the macroeconomic backdrop, VIX and VX bouncing at support, overbought ES and SPX, elevated oil and gas, DXY at support, rising inflation, and the very real risk of the Iran war expanding, I would be very wary of chasing stocks. We are quite overdue for a significant backtest to close multiple obvious gaps, with the most obvious one being 6% lower at 6618.

Stay tuned…

VX (VIX futures) bounced this morning and is back above its 200-day moving average, keeping bears’ hopes alive for lower lows.

The turn can be seen in VX’s RSI which very noticeably bounced on the yellow trend line from Nov 2024. This trend line has been more influential than the traditional RSI-30 line, which hasn’t been touched since May 2024 when it powered SPX to its 2.618 extension of the COVID crash in Feb-Mar 2020.

These RSI troughs usually line up with new highs in SPX, though this time it came up just shy of its Jan 28 highs at 7002.28. As we have previously noted, it has left some massive gaps in its wake – most notably at 6618.26 on Apr 7. But, we are also due a backtest of the 200-day moving average, currently at 6675ish.

The pattern is beginning to resemble the 2015-2016 correction. Recall that the initial 4.2% correction was terminated at the SMA200 and rebounded (twice) to just shy of its previous highs before plunging to a -12.5% correction. It bounced sharply to near its former highs, then plummeted over 15% – finally backtesting the 1.272 extension of the 2007-2009 GFC crash at 2138.

The sequence illustrates the shortsightedness of engineering a rebound before reaching significant support – in this case the 1.272. SPX had backtested it before, but that was a rather infamous (illegitimate?) bounce on Oct 15, 2014 when Fed governor James Bullard mused on Bloomberg about yet another round of QE.

It’s too early to assume that we’re looking at an analog which would take SPX down to 6150-6225 or 5646 (in mid-July, my favorite scenario.)  But, if the administration keeps cocking things up in the Middle East, it’s not too hard to imagine such an outcome.

Approximately 40% of China’s oil comes through the Hormuz Strait. Or, at least it used to before we started blockading it. They were thought to have a 120-day strategic reserve. Since the last tanker bound for China sailed through the Strait one week ago, things could get pretty dicey around early August. If Iran wants to see Trump neutered (he’s doing a pretty good job of it all by himself) they’d hold off on any peace deal until after the US midterms in November.

Bottom line, the closer we get to August without China’s oil supply resuming, the greater the chance that China does some blockading of their own – say, Taiwan. With so much of our munitions being depleted in Iran and a clown car full of Trump cronies in charge of negotiations, the thought of an escalating conflict with China is pretty damn distressing.

Stay tuned…

PPI for final goods was reported at 0.5% MoM and 4.0% YoY, much lower than legitimate estimates (those grounded in reality and free from punitive oversight.)

Combined with oil and VIX futures being hammered and a handful of positive earnings reports, SPX has reached its .886 Fib retracement at 6924.15. ES is still slightly shy of its at 6994.94.

VIX has now fallen 43.5% in the past 10 sessions, reaching potential channel and RSI TL support.

But, the bigger fundamental factor remains oil, which has declined in the face of the US blockade of Iranian exports.

Stay tuned…

Unable to force Iran to reopen the Strait of Hormuz militarily or through negotiations, Trump announced instead a blockade of the critical passage.

“Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz.”

Oil prices spiked back above 100.

 

Futures fell sharply in the pre-market, but have recouped about two-thirds of their losses.

 

And, a very large gap remains at 6618.26 – about 200 points lower.