The expanding Iran War has driven oil prices up beyond another trend line of resistance, adding to the market’s angst and increasing the odds of an equity breakdown. The yellow TL from 2022 has been broken numerous times, but sharp, swift pullbacks always followed.

A newer line of resistance, the white dotted trendline, began to hold sway in July 2024. It has now been broken as well. Depending on whom you ask, this breakout could be more long lasting. The likely net result: higher inflation and much lower odds of those FOMC rate cuts that stocks have been banking on.

There’s a differently-shaped pattern in RB that also shows a breakout. And, frankly, the transmission mechanism is stronger between YoY gas price changes and inflation than it is oil prices.

Either the administration was wildly overoptimistic about the pace of the war or they just decided not to worry about inflation/interest rates/stock prices. Since there is zero chance of the latter, we’ll assume that they badly miscalculated the speed and ease with which they could take over Iran’s oil fields. If CL remains above 75, don’t look for stocks to recover any time soon.

We’ve been looking to ES’ 200-day moving average for the past week or so, anticipating that ES might be allowed a tag once it reached a logical turning point. That point is now, here at the .786 Fib. It would form a nice little Gartley pattern and would give the bulls a reason to breath a sigh of relief.

If the SMA200 doesn’t hold however – say in the wake of persistently high oil prices – there are many much lower targets on which to focus.

SPX’s RSI certainly suggests much lower prices. It has been making lower highs since July 2025, a remarkable span of negative divergence that has accelerated since September and should pay off handsomely for bears.

I’d like to thank those who have sent notes of encouragement over these past few weeks. I have been experiencing daily headaches for over a year. They were accompanied by vision changes, hearing changes, fatigue, and intracranial hypotension which caused my brain to literally sag within my skull. I was fortunate to connect with one of the world’s top experts in cerebrospinal fluid leaks who surgically repaired what was ultimately diagnosed as a venous fistula. The improvement in symptoms has been dramatic. Although I am very sore from spine surgery, I am looking forward to getting back to normal. Thank you for your patience and your support.

I will be working over the next few days to finish the work on the website’s membership management system. So, this would be a good time to renew or update your memberships before everything is back behind a paywall.

Stay tuned…