Yo Pit Crazies,
Iran fired two missiles in 24 hours. Whether that number is perfectly accurate or not, the direction is clear: Three weeks into this war, Iran's offensive output has slowed to a crawl. The navy is gone. The air force is gone. Israel claims the ability to enrich uranium and produce ballistic missiles has been destroyed. And this morning, Trump announced a five-day postponement of strikes on Iranian power plants, citing "productive conversations."
Here's what matters for your money: none of that matters yet.
The market does not care about missiles. The market cares about tankers. Since March 1, only 138 commodity ships have crossed the Strait of Hormuz. That is a 95 percent drop from peacetime traffic. Until that number starts climbing, oil stays above $100 and VIX stays elevated.
Spring hit the calendar this week and I'm already in shorts up here in Maine. The flip flops came off at first snow, the shorts go on at the equinox. That is the Cali boy in me. Speaking of lines in the water, I expect Sibyl, our AI-powered vol scanner, to find some trade setups shortly.
Iran Is Out of Options.
The Market Doesn't Believe It Yet
Look at oil. Brent dropped from around $107 on Thursday to $101 this morning on the Trump announcement. That is a decent move, but still above $100. Before the war, oil sat below $70. We are nowhere near normal. The IEA estimates disruptions have pulled roughly eight million barrels a day off the global market. Saudi Arabia is diverting crude through the Red Sea pipeline to Yanbu. Qatar's LNG exports are frozen. Kuwait's refineries took hits last Wednesday.
If you want to see what oil and gas assets getting torched looks like, take a look.
SPY 20 Day Chart
The Hormuz Test
This is the only metric that matters right now. Iran controls the chokepoint and is selectively allowing a handful of ships through, mostly its own tankers and some Chinese-linked vessels. India got a couple of LPG carriers through. But the insurance market pulled war risk coverage, and no major commercial shipper is willing to send tankers through without it. The strait is not physically blockaded. It is economically blockaded. And that is harder to fix because it requires sustained safety, not a single announcement.
Treasury Secretary Bessent said Monday the U.S. is allowing Iranian tankers through to keep global supply moving. Trump is pushing NATO and allies to send ships for escort duty. Six nations said Friday they are "ready to contribute" but gave zero specifics.
20 Day VIX chart
VIX closed Friday at 26.78. It has been stuck in the 24 to 27 range for over a week now. That is the top quartile of volatility. It is not panic, but it is anxiety. The VIX is telling you the market is pricing in uncertainty, not catastrophe. Traders are waiting for one thing: proof that the Strait of Hormuz can reopen safely.
Until tankers roll through unmolested and insurers restore coverage, VIX stays above 20. We are still in a sell-the-rip market.
Rant and Rave
I will say this: the coverage of this conflict has been bizarre. Certain outlets seem more interested in what went wrong than what the military has actually accomplished. You can have opinions about the war. But reporting should reflect what is happening on the ground, and right now, Iran's military capability is a fraction of what it was three weeks ago. That is a fact worth covering.
Your Move
Watch the Strait. Watch VIX 20. If Hormuz traffic picks up and insurance coverage returns, that is your signal to flip from selling rips to buying dips. Until then, stay patient and stay hedged. If you want to see what institutions are doing with their dollars, tune in to my replay.
To your trading success,
AG