Yo Pit Crazies,

I thought Monday was going to be ugly.

As ugly as what is left of my favorite chicken Festus.

All that is left of Festus is a pile of feathers.

Not unlike the peace negotiations that went on this weekend.

Well something good happened and something didn’t.

RIP Festus

The SPY tells the story

The whole peace process got chucked when Iran would not give up their nuclear aspirations. Color me surprised. I will let you in on a secret. That was never going to happen. There will never be a “treaty”. There will only be a slow strangulation of the IRGC. As soon as Iran walked out, the USA took over the Strait of Hormuz. Now the USA, in a little over 30 days, controls the main artery in the Persian Gulf. I bet you did not see that coming unless of course you were reading here where i said, over and over, the number #1 goal is controlling the Strait.

Did the S&P 500 Trust (SPY) like it?

5 Day SPY chart

Now the bad news

The USA controls the shipping in the Strait. Which means we are there for a while and this conflict will go on but at a different speed. With the Strait of Hormuz in effective USA control, the oil assets in Iran will get strangled and the IRGC will run out of dough unless someone wants to give them some money. It is likely VIX stays higher in the short term leaving the index annoyingly around 18. Not really going up but not going down until the all clear signal is blown which might take several months even a year.

While Trump tweets crazy tweets, the policy keeps moving forward toward goals. At this point don’t be short SPY. We might get little dips, but the policy plan is moving forward whether we believe it or not.

The next week is here and the Game Plan does not care about the Strait of Hormuz? Check out the Game Plan here.

To Your Trading Success,

AG