A unilateral ceasefire announcement on Thursday drove a sharp rise in the S&P 500, but the move soon faded and the announcement level was broken before the European session. Markets then moved lower for most of the period described, with each later verbal intervention producing a smaller and less durable spike. Technology shares held up better than the S&P 500 for roughly the first two hours of the regular session, then fell more in line with the wider market. Trading rotated intraday between the S&P 500, Nasdaq and gold.

De Escalation Fails To Materialize

The text states there was no de-escalation, with Iran retaliating and Yemen joining over the weekend. It also cites assurances of no ground invasion alongside a build-up involving the 82nd Airborne and more troops. Equities are described as being in a downtrend, with rallies failing to develop. Selling is portrayed as steady and one-way, without capitulation or unusually high volume, with frequent red hourly candles and weak stabilisation attempts. Gold and silver are described as showing stabilisation, while oil is said to continue rising. Support levels are presented as the main target, with uncertainty focused on timing rather than direction. We recall how verbal interventions, like the unilateral ceasefire announcement in 2025, are buying less time and smaller market spikes. That rally was erased almost immediately, establishing a pattern where markets are increasingly skeptical of headlines not backed by action. This trend continues as the S&P 500 just failed to hold its 50-day moving average this past week despite positive inflation whispers. The current environment shows no meaningful de-escalation, reminding us of the troop build-ups we analyzed last year. The Volatility Index (VIX) has reflected this growing anxiety, climbing from a low of 14 earlier this month to over 22, signaling that traders are actively buying protection. This isn’t panic, but it is a clear recognition of rising risk in the system.

Positioning For Downside Risk

Given this, holding protective put options on broad market indices like the SPY seems prudent. The CBOE equity put/call ratio has been trending higher, recently pushing above 0.85, which shows a significant increase in bearish bets among traders. This suggests we are right to position for further downside or, at a minimum, to hedge long exposure. The persistent strength in oil, with WTI crude pushing past $95 a barrel on renewed shipping lane tensions, is calling the market’s bluff on a peaceful resolution. This mirrors the dynamic from 2025, where energy strength coincided with equity weakness. Traders could consider call options on energy sector ETFs to play this divergence, while remaining cautious on tech, which is starting to lag again after a brief period of resilience. The market decline remains orderly, marked by weak rallies that consistently fail, making it difficult to short into strength with a good risk-reward profile. Therefore, buying puts with at least 45 to 60 days until expiration allows a position to weather these brief, unconvincing bounces. This strategy avoids the frustration of trying to time intraday moves in a market that is grinding down rather than capitulating. Create your live VT Markets account and start trading now.

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