Weekly And Cross Asset Signals
The week included a new development on the S&P 500 weekly chart, as well as further signals from credit markets. Gold failed to hold gains even as oil and the VIX continued to rise. The Nasdaq held up better at first, including early hourly strength in SMH and IGV, but it later reversed as well. A possible near-term stabiliser was raised in relation to Iranian comments about shipping through the Strait staying open, while the dollar’s move was presented as reflecting market positioning. The failed rally after last week’s Core PCE data came in hot at 3.1% shows that sellers are firmly in control and buying the dip is a losing strategy right now. We are seeing significant de-risking, so buying puts on the SPX or NDX offers a direct way to position for more downside. Any short-term bounces should be viewed with extreme suspicion until this underlying weakness changes. With the VIX closing the week above 22, a level of fear we haven’t seen for several months, hedging is no longer optional but a necessity for any long positions. The US Dollar Index breaking out to close at 100.85, its highest level since the fourth quarter of 2025, is a major headwind for stocks. We believe VIX call options are a prudent hedge against a more significant volatility event in the near future.Credit Spreads And Hedging
We are also watching credit markets closely, as high-yield credit spreads have widened by 35 basis points this month to over 450 bps, signaling real concern from bond traders. This type of price action feels very similar to the sharp sell-off we experienced in the third quarter of 2025, which also began with stubborn inflation fears. The bond market is telling us to reduce risk in equities. Gold’s inability to rally during this flight to safety is a warning sign, so we would avoid calls on the metal or miners like GDX for now. Instead, geopolitical tensions are showing up directly in energy markets, with Brent crude futures now trading above $95 a barrel on concerns over the Strait of Hormuz. This environment could benefit traders who are holding long positions in energy derivatives. Create your live VT Markets account and start trading now.
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