Don here...
The U.S. initiated a conflict with Iran over the weekend. Brandon Chapman just broke down why the S&P 500's flat session is the most dangerous signal of the day.
Oil spiked 8%. Treasuries sold off hard. Gold rallied. The S&P 500 moved 0.01%.
That tells you the equity market has not priced in what happens if this conflict drags on. Brandon laid out exactly where the risks are hiding and which trades are already positioning for the fallout.
The bond market is the one to watch. TLT dropped 1.39% today as treasuries got dumped. Investment grade bonds got smashed. High yield credit got smashed. If yields keep rising, borrowing costs climb for every company financing AI expansion, real estate development, and corporate debt.
Brandon flagged a critical chain reaction forming. Higher oil prices feed inflation. Inflation pushes bond yields higher. Higher yields crush corporate earnings. The S&P 500 has been trapped in a volatility box between 6,100 and 6,800 for months, and this is the kind of catalyst that breaks the range to the downside.
The Chinese yuan is under the most pressure against the dollar that Brandon has seen in a long time. If China's cheap oil supply from Iran and Venezuela gets cut off, they may be forced to sell U.S. treasuries to support their own currency. That would accelerate the bond sell-off and send yields even higher.
Brandon pulled up the Ghost Prints surveillance console and walked through two trades already showing up in the flow in tonight's video:
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Someone bought 14,000 XLE call options at the $68 strike for April 17th. The delta is zero, meaning these are deep out of the money lottery tickets. If the conflict prolongs and oil pushes toward $100, energy stocks could rip to that level by April or sooner.
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A trader bought 12,750 put options on D.R. Horton (DHI) at the $152.50 strike expiring this Friday, March 6th. That is a 37 delta put, and the size of the trade is rare. If DHI breaks through that level, it creates a gamma squeeze with downside targets near $135 to $140.
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Gold is better positioned than silver in this environment. Silver is an industrial metal tied to Chinese production. If China's energy costs surge, the thesis for silver's AI-driven rally weakens. Gold benefits directly from dollar weakness and inflation fears.
The market gave you a flat tape on a day that could reshape global energy flows, treasury markets, and corporate earnings for months. Brandon broke down every level and every trade setup.
Click here to watch Brandon break down the Iran conflict trades and what the bond market is really telling you
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
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