Key Points
- Brent crude futures (May’26) rose after President Trump paused his threatened attack on Iran’s energy facilities until April 6.
- The S&P 500 broke primary support at 6550.
- The Dollar strengthens with the prospect of higher interest rates.
- Gold tests primary support at $4,400 per ounce.
Brent crude rallied to $109 per barrel on news that negotiations may take longer than initially indicated. Retracement will likely respect support at $105 per barrel, signaling another test of $114.
Markets continue to receive conflicting messages on the war with Iran.
President Trump said he would extend a pause to attack Iran’s energy facilities to April 6, a little over a week after the original deadline that was set to end Friday.
“As per Iranian Government request, please let this statement serve to represent that I am pausing the period of Energy Plant destruction,” Trump said in a Truth Social post. “Talks are ongoing and, despite erroneous statements to the contrary by the Fake News Media, and others, they are going very well. Thank you for your attention to this matter!” (CNBC)
Iran’s Foreign Minister ruled out direct talks with the US but says they are reviewing the US 15-point proposal submitted through Pakistani intermediaries.
House Speaker Mike Johnson said Wednesday that Operation Epic Fury is “almost done” and is “wrapping up.”
….Johnson said that the objectives of the operation “have been met,” but access to the Strait of Hormuz still needs to be “straightened out.” (CBS)
The military buildup continues:
WASHINGTON, March 24 (Reuters) – The Pentagon is expected to send thousands of soldiers from the U.S. Army’s elite 82nd Airborne Division to the Middle East, two people familiar with the matter told Reuters on Tuesday, adding to a massive U.S. military buildup even as President Donald Trump talks about a possible deal with Tehran to end the war.
The New York Post:
The Pentagon is reportedly considering a plan to send an additional 10,000 troops to the Middle East amid the war with Iran.
The potential deployment would likely include infantry and armored vehicles and would be on top of the 5,000 Marines and sailors and roughly 2,000 members of the Army’s 82nd Airborne Division who have already been dispatched to the region, according to the Wall Street Journal.
When one party threatens the other, it is normally a sign that the negotiation is not going well:
President Trump is ready to “unleash hell” on Iran if Tehran does not accept a deal to end the war in the Middle East, the White House warned on Wednesday.
“If Iran fails to accept the reality of the current moment, if they fail to understand that they have been defeated militarily and will continue to be, President Trump will ensure they are hit harder than they have ever been hit before,” Press Secretary Karoline Leavitt said in a briefing.
“President Trump does not bluff and he is prepared to unleash hell.” (CBS)
Iran and Israel seem to have longer-term objectives, but President Trump is desperate for an off-ramp. Opinion polls show the war is unpopular in the US:
The Iranians know that the closer it gets to the US midterms in November, the greater their leverage.
Trump has few good options: escalate the conflict or settle on a potentially bad deal with a weakened yet defiant Iran that has choked off much of the world’s oil supply….
A clear and quick victory could pay dividends for Trump politically. But a settlement that credibly contains Iran appears to be far off….
The terms required to wind the war down may involve concessions to Tehran that do not satisfy Israel, which appears to want to press ahead. (Reuters)
Copper continues its downtrend, warning that the global economy is slowing.
Mega-cap technology stocks are dragging the major indices lower. The Roundhill Magnificent 7 ETF (MAGS) signals a strong bear trend after breaking primary support at 63 in early February.
The S&P 500 has now followed with a breach of primary support at 6550, confirmed by the recent dead cat bounce.
The Dow Jones Industrial Average is testing the primary support band between 45,500 and 46,000. A breach would confirm the S&P 500 bear market signal.
The S&P 500 Equal-Weighted Index ($IQX) shows that large caps are now outperforming mega caps, which had led the market for several years. It’s all relative, however. Declining Trend Index peaks below zero warn of selling pressure.
Bitcoin1 continues to test the support band between 64,000 and 70,000, indicating that financial markets have become risk-averse.
10-year Treasury yields respected support at 4.3%, offering a short-term target of 4.65% as the prospect of further rate cuts fades.
The US Dollar Index is testing resistance at 100, driven by the prospect of higher interest rates.
Gold is testing primary support at $4,400 per ounce. Respect, indicated by recovery above $4,600, would indicate another test of $5,000, while a breach would offer a target of $4,000.
Conclusion
Mixed messaging over negotiations with Iran indicates that progress is slow. Conflicting objectives between the US and Israel may also prevent a quick resolution to the war against Iran. A quick exit is unlikely.
A downtrend in copper prices warns that the global economy is slowing.
The S&P 500 broke support at 6550, signaling a primary downtrend. A Dow Jones Industrial Average breach of primary support at 45,500 would confirm a bear market.
The prospect of higher interest rates, with the market pricing out further rate cuts, has strengthened the Dollar, triggering a selloff in gold. A breach of primary support at $4,400 per ounce would offer a target of $4,000, while respect of support would signal another test of $5,000.
Acknowledgments
Notes
- Cryptocurrencies are the highest-risk asset class, and we analyze Bitcoin (BTC) solely to identify risk sentiment in financial markets. Our analysis is not a recommendation to buy or sell BTC, nor is it a commentary on the merits of cryptocurrency.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.
