The S&P 500 closed at another record high, rising 0.26%, while the NASDAQ gained 0.36% and extended its winning run to 12 sessions, its longest streak since 2009.
Brent crude rose 4.70% to $99.39 per barrel, yet US equities continued to move higher despite the jump in oil prices.
Recent Rally Strength In Context
Deutsche Bank noted that the current S&P 500 advance over 11 business days is one of the strongest in recent years, with a 10.7% rise since 30 March used as a reference point.
The bank also pointed to March 2022 as the last time there was a larger 11-day move in the index, when gains were linked to expectations of an early ceasefire in the Russia-Ukraine war, before equities later weakened.
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The S&P 500 is currently pushing record highs near 6200, and this market strength feels very familiar. We are looking back at analysis from mid-2025, which warned that a sharp rally then looked just like the false one in March 2022 that quickly reversed. The current environment presents a similar warning sign for us today.
Positioning For Downside Protection
Complacency seems to be setting in, as the CBOE Volatility Index (VIX) is sitting at a low 13.5, indicating very little fear among investors. The equity put-to-call ratio has also dipped to 0.65, showing that traders are buying far fewer protective puts compared to bullish calls. This lack of demand for insurance often appears just before the market sentiment shifts.
Underneath the surface, the latest Consumer Price Index (CPI) report came in slightly hotter than expected at 3.4%, a reminder that inflationary pressures have not been fully extinguished. This makes the foundation of the current rally feel fragile, much like the 2022 rally that was built on ultimately hollow hopes of a ceasefire. We saw a similar dynamic in 2025 when strong market gains ignored rising oil prices, a risk that was quickly repriced.
Therefore, we should consider using the current low volatility to buy downside protection before it gets more expensive. Purchasing out-of-the-money puts on the SPY or QQQ ETFs could provide an effective hedge against a sudden drop. This is a moment to be cautious, as history suggests such rapid, complacent rallies can reverse just as quickly.
