Thoughtful insights and approachable analysis.
- NEM is testing support near 108, and if gold stabilises and RSI pushes above 50, the setup could evolve into a bullish "W" reversal.
- LMT continues to outperform the SPX500 with steady momentum, and if its bullish EMA structure steepens, the next leg higher could follow.
- BP has ridden the oil surge triggered by Middle East tensions, and with momentum still positive, it remains a useful hedge if supply risks keep crude elevated.

Quick Market Overview

US stocks staged a sharp turnaround after President Donald Trump suggested the conflict with Iran may end sooner than expected. The Dow, S&P 500 and Nasdaq all closed higher after opening Monday's session with steep losses as oil briefly surged toward $120 a barrel. Optimism that tensions could ease helped lift sentiment into the close, producing the market's largest intraday reversal in months. However, uncertainty remains, with futures slipping slightly after Trump indicated the conflict is not yet finished.

The Strait of Hormuz

The Strait of Hormuz is crucial to global financial markets because it is the main shipping route for oil leaving the Persian Gulf. Around 20 million barrels of oil per day, roughly 20% of global petroleum consumption, pass through the strait, meaning a large share of the world's energy supply depends on this narrow waterway remaining open.

As energy is a core input for the global economy, any threat to this route immediately raises concerns about supply shortages and higher inflation. The current conflict involving Iran disrupted shipping through the Strait of Hormuz and sparked fears that a significant portion of global oil supply could be cut off. This pushed oil prices sharply higher, with crude briefly surging above $100 per barrel, which in turn rattled financial markets as investors worried about rising energy costs, inflation, and weaker economic growth.

The key risk for investors is duration: the longer shipping through the strait remains disrupted, the tighter global oil supply becomes, which can push energy prices even higher and increase the economic damage to companies and consumers.

Maintaining Defensive Signals
Given that shipping through the Strait remains heavily restricted, risks to global energy supply have not fully receded, despite recent comments suggesting the Iran conflict could end sooner than expected. Market reactions are likely to depend less on political rhetoric and more on the actual restoration of tanker traffic through the Strait. With shipping still constrained and supply chains under pressure, energy markets remain vulnerable to further disruptions. For now, AlphaTrack will maintain a defensive stance in its signals, requiring clearer evidence that conditions in the Strait of Hormuz are genuinely stabilising before shifting away from defence.

General Equity Market Health (SPX500)

The SPX is currently trading in a congestion range, with resistance near 7,000 and support around 6,710. Year-to-date, the index has largely oscillated between these two levels. At the same time, the RSI has hovered around 50, reflecting the lack of a clear directional trend. The key question now is whether the RSI continues to drift around this midpoint, breaks above 50 and holds (a bullish signal), or moves below 50 and holds (a bearish signal).

In our view, yesterday's candle (green up arrow) marks an important inflection point. The SPX500 was heavily sold early in the session, reaching a low near 6,580, before selling pressure began to fade. Bulls then stepped in and pushed the index back above its opening level, with the SPX500 closing 0.84% higher on the day. That reversal suggests a meaningful shift in sentiment.

If buyers follow through with conviction, the RSI could move above 50 and hold, which would provide technical support and potentially open the door for a challenge of the 7,000 resistance level. The key, however, is sustained bullish follow-through, and that may depend heavily on developments in the Strait of Hormuz. The critical question is whether shipping traffic begins to normalise.

Potential Conflict Diversifiers
Last week we highlighted Newmont (NEM.us), Lockheed Martin (LMT.us), and BP (BP.uk) as potential diversifiers while the conflict in the Middle East introduces a degree of uncertainty. Despite the strong SPX500 candle noted above, we believe there is still enough uncertainty to justify keeping these diversifiers on our list.

Potential Trade Setups

Newmont Corporation (NEM.us)

Technical Analysis
- NEM has lost some of its technical structure over the past week.
- This follows a stronger USDOLLAR, which has acted as a haven and weighed on gold.
- Nevertheless, gold remains a traditional safe-haven during periods of uncertainty, and NEM maintains a strong correlation with the yellow metal.
- The stock is finding support near 108 and has shown early signs of a bounce (black arrow).
- If this support holds and price moves higher, a "W" pattern could begin to form.
- For the pattern to carry real significance, the RSI needs to move above 50 and remain there (blue arrow).
- If the RSI achieves this, it would signal sufficient momentum for the "W" pattern to complete.

Caveat
- The caveat is if the RSI fails to break above 50 and remains below that level.
- This would signal insufficient positive momentum to complete the "W" pattern.
- If flows continue to favour the greenback, this scenario becomes more likely.

Fundamental Perspective
Gold has been surprisingly subdued over the past week, meaning bullion and related miners have not acted as strong havens. Even so, the yellow metal is holding support and momentum may be beginning to build. Against this backdrop, NEM remains compelling, particularly given its developing technical setup. As the world's largest gold miner, Newmont is well placed to benefit from higher bullion prices through stronger revenue and cash flow, and analyst consensus remains broadly constructive.

That said, miners do not always move in lockstep with gold. Production trends, cost control and operational execution all matter, and gold equities can lag the metal in the short term. Still, in a sustained risk-off environment, Newmont offers leveraged exposure to higher gold prices.

Lockheed Martin Corporation (LMT.us)

Technical Analysis
- LMT behaved largely as expected.
- It outperformed the broader SPX500 over the past week since our last AlphaTrack, and did so with far less volatility.
- Its RSI remains above 50, suggesting underlying positive momentum.
- The EMAs are in a bullish formation, although we would prefer to see a steeper angle.
- A stronger slope in the EMAs would indicate that price momentum is building to the upside.

Caveat
- LMT's gap has now closed, though we remain hopeful it proves to be a continuation gap, as suggested last week.
- However, if the RSI slips below 50, it would be a negative development, signalling fading momentum.
- Should the RSI remain below 50, LMT is likely to face near-term upside limitations.

Fundamental Perspective
LMT shares have continued to draw investor attention as the Middle East conflict intensifies, with defence contractors often benefiting from rising geopolitical risk and the prospect of higher military spending. Recent developments in the Iran conflict have reinforced demand expectations for advanced weapons systems, including fighter jets and missile-defence platforms supplied by Lockheed.

In particular, the company's exposure to programmes such as the F-35 fighter jet and missile-defence technologies places it close to the centre of current military operations and replenishment cycles, which can lead to additional orders as stockpiles are used and governments accelerate procurement.

BP (BP.uk)

Technical Analysis
- BP has had a strong week since the last AlphaTrack, as oil briefly surged toward $120 per barrel before easing back below $100.
- As a result, it outperformed the broader market during the period.
- However, its performance remains closely tied to the trajectory of oil prices.
- If tanker traffic normalises through the Strait of Hormuz, that could weigh on oil and, by extension, BP.
- Conversely, if disruptions persist in the strait, the stock could continue to act as a useful diversifier.
- Its RSI remains comfortably above 50, suggesting underlying support for the price.
- The EMAs are in bullish formation, indicating the broader trend remains upward.

Caveat
-If BP's RSI drops below 50 and stays there, it would be a negative signal.
- This would indicate that bullish momentum is fading, as an RSI below 50 typically reflects weakening trend strength.
- Such a shift could occur if traffic through the Strait of Hormuz normalises and oil prices ease, since disruptions to the strait have been a key driver of higher crude prices during the conflict.

Fundamental Perspective
The escalating Middle East conflict has kept oil markets highly volatile. Brent initially surged toward $120 per barrel as fears grew that fighting around Iran could disrupt flows through the Strait of Hormuz, a route that normally carries roughly 20% of global seaborne oil supply.

More recently, prices have pulled back sharply toward the low-$90s after signs that the conflict may de-escalate and that governments could move to protect tanker traffic and stabilise supply.

For energy equities, the move has still supported sentiment. Integrated majors such as BP tend to benefit when crude rises because higher prices feed directly into upstream earnings and cash flow, giving the sector leveraged exposure to geopolitical risk. However, the recent swing in prices also illustrates how conflict-driven rallies can fade quickly if tensions ease or shipping through Hormuz begins to normalise.

Hot News, Cold Logic

Markets swung sharply as oil surged toward $120 before retreating below $90 after signals that the Iran conflict might ease. The rebound helped lift equities, but investors remain wary as the war has added a fresh shock to an already fragile global outlook. Rising energy costs, growing concerns about AI-driven disruption and emerging strains in private credit are combining to increase market uncertainty. Even if geopolitical tensions fade, multiple risks now threaten to unsettle the long-running bull market.

Final Thought

Markets have been jolted by geopolitics as the Iran conflict sent oil briefly surging above $100, at one point nearing $120, rattling equities and raising fresh inflation fears tied to disruptions around the Strait of Hormuz. Yet markets have also shown resilience: as hopes of de-escalation surfaced, oil retreated toward $90 and equities rebounded sharply across parts of Asia. The episode is a reminder that while geopolitics can shock markets in an instant, periods of stress often become the moments when the next opportunities quietly begin to form.