Shipping through the Strait of Hormuz rose nearly 400% over two weeks, reaching almost 200 vessels last week versus about 150 the prior week and roughly 40 two weeks earlier. However, Iran\u2019s crude flows to Asia have almost dried up ahead of the US\u2019s latest sanctions, with loaded tankers reportedly stuck inside the Gulf and empty ships struggling to enter. Cargo costs were described as at their highest level in years, while Iran\u2019s central bank governor said exports have \u201cvirtually stopped\u201d, suggesting higher transit volumes do not equate to normalised oil supply.<\/p>\n
WTI remains in a local uptrend after breaking a descending trendline and is retesting the 4H 50-EMA band as Stochastic RSI has returned to oversold territory. A potential inverse head-and-shoulders is forming, with the neckline at 85.95\u201387.84, and a break could imply a measured move towards the $100 area if the 50-EMA holds. In equities, the VIX has stayed in extreme low-volatility territory for 17 days, and it has spent about four weeks below 17.00, with historical scope for 7\u20138 weeks; the S&P 500 could grind towards 7,816\u20138,000, while attention turns to Nvidia earnings on Wednesday after the close.<\/p>\n
We are closely watching the energy markets as Strait of Hormuz traffic recently surged by nearly 400% in two weeks, even though Iranian oil exports have virtually halted ahead of new US sanctions. Despite more ships passing through this vital choke point\u2014which historically handles about 20 million barrels of petroleum daily\u2014global supply remains highly volatile. Derivative traders should closely monitor WTI crude as it holds its local uptrend and tests the crucial 4-hour 50-EMA band.<\/p>\n
If WTI maintains this support and breaks above the technical neckline resistance between $85.95 and $87.84, we could see a rapid breakout targeting the $100 mark. We recommend traders consider buying call options or establishing long futures positions if a daily close above this neckline occurs on strong volume. On the other hand, if this key support level fails, we should quickly pivot to short positions or put options to capitalize on a drop back toward lower support levels.<\/p>\n
In the equity space, we are seeing signs of extreme market complacency as the VIX volatility index has lingered below 17 for nearly three weeks. Historically, quiet periods where the VIX remains this low can persist for up to eight weeks, just as we observed during temporary market tops in 2024 and 2025. This environment suggests that the S&P 500 could continue to slowly grind upward toward the 7,816 to 8,000 range.<\/p>\n
However, because the index is currently trading near the upper limit of its long-term logarithmic channel, we advise derivative traders to be highly cautious with overnight long positions. We recommend using protective put options or VIX call spreads to hedge existing equity portfolios against a sudden spike in market volatility. The risk-reward ratio for buying calls on the broad index at these extreme psychological levels is becoming increasingly unfavorable.<\/p>\n
The most critical catalyst to watch this week is Nvidia’s earnings report on Wednesday, August 26, which frequently dictates the direction of the entire market. Option markets are currently pricing in an implied move of around 8% for Nvidia shares post-earnings, which is highly consistent with its historical average move of 8.1% over the last several quarters. We suggest keeping trade sizes small and waiting for this high-impact event to pass before putting on large directional trades in tech-heavy indexes.<\/p>\n\n\n\n