Crude at $109, Credit Spreads Blowing Out, and the S&P is Still Pretending Everything's Fine

Let's do a vibe check on this market: Brent crude is above $109/barrel, the Strait of Hormuz is one Trump Truth Social post away from a full blockade, credit spreads are blowing out in patterns that have preceded bear markets three out of three times in the past 20 years (per Andrei Jikh's latest), and the S&P 500 is casually trading below both its 50-day and 200-day moving averages while hedge funds quietly build short positions. That last week's rally? TheChartGuys and Bloomberg both called it — that was a short squeeze, not a salvation.

The technical picture is genuinely ugly. The Traveling Trader points out that every time the S&P 500 closes below the 200 EMA and retests the 21 EMA since 2014, a new lower low follows. Key support levels to watch: SPY at 662.76, QQQ at 591.33. Meanwhile, crude surging 12% in a single session while stocks barely flinched suggests the market is either desensitized to the Iran war narrative — or it hasn't fully priced the supply chain carnage that a closed Strait of Hormuz would unleash on oil, fertilizer, chemicals, and chip manufacturing inputs.

The Fed is caught in a textbook stagflation trap: raise rates to fight oil-driven inflation and you crack the credit markets further; cut rates and you pour gasoline on a fire that's already got its own Wikipedia page. Forward S&P 500 PE has compressed to 19x with earnings estimates revised up 14% — which sounds bullish until you remember that bond markets are basically wearing a sandwich board that says 'the recession is coming and it brought friends.'

The one group sleeping soundly right now? The people who bought physical gold in 2005 at $500/oz and are watching it trade near $4,600. Annoying, but fair.