"The S&P bounced beautifully — straight into its 200-day moving average. This week, the Strait stays shut, Trump's deadline expired unanswered, and March CPI drops Thursday. The market is in the in-between. That never lasts long."
— Proflex Panel
The week of March 30 – April 4 gave bulls what they needed: the S&P 500's first weekly gain in six weeks, up 3.4% — its best week in four months. Panic selling absorbed five weeks of war-driven losses, short sellers covered, and the index clawed back to 6,582 before markets closed for Good Friday.
But the bounce ran straight into a wall.
The 6,600–6,660 zone — where the 200-day moving average converges with the war's descending trend line — rejected every attempt to close above it. The Thursday intraday high barely tagged 6,601 before pulling back. As we outlined in Wk 10 when 6,700 was the must-hold level, these zones don't yield cleanly — they require a catalyst. This week, the calendar delivers several.
Three collision events are converging as markets reopen Monday: Trump's April 6 ultimatum for Iran to reopen the Strait of Hormuz expired this morning with Tehran formally rejecting it. Brent is holding at $111. And March CPI — the first inflation reading to capture the full oil surge — drops Thursday. The VIX has cooled from its panic peak near 30 to 24.54, but its 200-day moving average sits at 18.88. The war premium is still fully embedded. This isn't a resolution. It's a pause.
Key Drivers This Week
The Resistance Test: 200-Day Moving Average or Roll Over
The S&P 500's best week in four months was also the market bumping into its most watched technical ceiling. The 200-day moving average sits at ~6,641–6,687 — the index closed April 2 at 6,582.69, below it. Markets were closed Friday (Good Friday) and reopen Monday into whatever war headlines the long weekend delivers.
The VIX at 24.54 reflects a market that has digested panic but hasn't resumed confidence. Steady-state for a non-crisis VIX is around 18 — we're still 6 points above that. Dealer hedging pressure has eased; it hasn't reversed.
Two scenarios define the week ahead: a sustained daily close above 6,660 changes the medium-term setup materially — the path to 6,800+ opens and the war correction starts looking like a base. If resistance holds and escalation news re-enters Monday's open, a retest of the 6,400–6,300 zone (September/November 2025 lows) is the next logical support.
Proflex View: The oversold bounce cleared the panic — it didn't clear the problem. Six-six-hundred is the line between "relief rally" and "resumption." The 200-day moving average is where every seller who missed the first exit is waiting. A weekly close above 6,660, on volume, changes the narrative. Until then, this is a zone to watch, not a zone to chase.
Operation Epic Fury: The Deadline That Wasn't
Trump's April 1 primetime address — delivered under the banner of "Operation Epic Fury" — delivered no breakthrough, no new strategy, and no de-escalation signal. Markets had quietly priced in a hint toward negotiation. Instead, Trump declared the US would hit Iran "extremely hard over the next two to three weeks" and positioned the war as a commercial opportunity: buy American energy now. As Raman noted in our weekly call, the speech read more like a sales pitch for US crude exports than a strategic update.
This morning, Tehran formally rejected Trump's April 6 ultimatum to reopen the Strait, calling the demand "helpless and nervous." Brent holds at $111.25; WTI at $111.54 — the latter up over 100% from its 2026 low. The Strait has been effectively closed since February 28. Only ~150 vessels have transited since then, mostly ships from Iran-allied nations: China, India, Pakistan, Russia, Iraq.
The more important signal is quieter. A French container ship, three Omani supertankers, and a Japanese-owned LNG vessel used the Oman coastal corridor in the first days of April — a narrow passage hugging Omani territorial waters that avoids Iranian-controlled waters. Iran and Oman are reportedly drafting a "supervised and coordinated transit" protocol. It is a trickle, not a flood. Goldman Sachs has Brent at $115/barrel for a 6-week disruption scenario; JPMorgan's worst case, if the Strait stays shut through mid-May, is $150/barrel. OPEC+ begins adding output in May. The IEA projects a 3.8 million barrel/day oversupply once disruptions end — which is why forward energy markets are partially pricing the resolution even as spot stays elevated.
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Ground invasion rumors are intensifying. Iraq has publicly warned against the use of Kuwaiti territory for any US land operation, threatening "all-out war." Israel has been conducting ground incursions in southern Lebanon since March 16.
Proflex View: The Oman corridor is the real signal — not Trump's speeches. Three vessels successfully transiting along Oman's coastline is the first concrete evidence of a logistics workaround forming. If that trickle becomes a pipeline — even before a formal ceasefire — oil comes down sharply and risk assets snap back violently. Watch Oman transit volume. The base case remains: logistics resolution precedes political resolution.
CPI Thursday: The Number That Could End Rate Cut Hopes
March CPI releases Thursday, April 10. This is the most important macro data point of the week — and possibly of the month.
February CPI came in at +2.4% YoY with core at +2.5%. That was the last clean pre-war reading. Since then, Brent moved from $75 to $111. Core PCE for January (most recent) was already at 3.06% — above the Fed's 2% target. ISM Manufacturing input inflation in March ran at its highest level since August 2025. The pass-through is not hypothetical — it's in the pipeline.
The Fed meets April 28–29. Markets price a 94.8% probability of a hold at 3.50–3.75%. But the divergence on what comes after is wide and widening: JPMorgan now forecasts zero rate cuts in 2026; Goldman still models two (June + September). Fed Governor Logan remains hawkish on inflation; Governor Bowman is watching February's 92,000 job losses and arguing for three cuts. The 10-year yield has pulled back from the 4.5%+ danger zone to 4.31% — a relief, not a clearance. DXY hovers near 100.
Proflex View: A March CPI above 3.0% closes the door on June cuts — even for Goldman. That repricing hits the long end of the yield curve immediately and compresses the same tech multiples that rallied last week. The critical sub-figure is core ex-energy: if oil bleed-through shows up in core, the stagflation thesis goes from Wall Street debate to mainstream consensus. Watch core. That's the number inside the number.
The Earnings Counter-Narrative: Tech Got Cheaper
While the war dominates headlines, a structural counter-narrative is quietly building. Q1 2026 S&P 500 earnings are expected to grow +13.2% YoY. Tech sector earnings expectations stand at +23.7%, with revenue growth of +21.2%. The AI capex cycle hasn't flinched: combined hyperscaler spending in 2026 is now $650–700 billion — Amazon at $200B, Alphabet at $175–185B, Meta at $115–135B, Microsoft at ~$145B. That's a 36% increase over 2025's $381 billion. None of it has been pulled back.
The S&P 500 forward P/E has compressed to 20.96 — essentially at the 5-year median of 21.12. The Nasdaq 100 forward P/E stands at 32.52, down significantly from 2025 peaks. As we've maintained since Wk 08, the tech bottom forms before the macro resolves. The correction handed investors a re-entry into quality AI names at fair value rather than a premium.
Bank earnings kick off next week: Goldman Sachs (April 13), JPMorgan, Citi, and Wells Fargo (April 14), Bank of America (April 15). These will be the first signals on whether investment banking activity and credit quality have held up beneath the war noise. Tesla reports April 22 with analysts expecting +60% YoY EPS growth. NVIDIA's Rubin platform is in production with early adoption from AWS, Google Cloud, Microsoft, and Oracle.
Proflex View: AI isn't over — and the war correction handed a rare re-entry. The $650B hyperscaler capex cycle cannot be cancelled by an oil shock; these are multi-year infrastructure commitments. Bank earnings starting April 13 are the next catalyst cluster. If JPMorgan and Goldman show healthy pipelines, it signals the underlying economy hasn't cracked despite the war premium.
Bitcoin & Gold: Same Safe Haven Category, Different Signals
Bitcoin is consolidating in the $65,000–$70,000 zone. The asset's resilience is partly structural: US-Israeli strikes on Iranian mining infrastructure cut global Bitcoin hashrate by 15% — the sharpest single drop in three years — removing a persistent seller from the market. Iran had accounted for an estimated 3–7% of global hashrate since 2019.
Long-term holders have been accumulating since mid-January 2026 — the first net accumulation phase since July 2025. MicroStrategy holds 762,099 BTC at an average cost of $75,694. Michael Saylor's "Back to Work" post on April 5 is his standard signal ahead of a new purchase announcement. Bitcoin miners, however, remain structurally underwater: average production cost is ~$79,995/BTC versus the current spot price of ~$67k — a margin squeeze that has already triggered miner selling of 15,000+ BTC in Q1.
Gold sits at $4,674/oz, consolidating after its speculative excess cleared. China has purchased gold for 16 consecutive months, building reserves to 2,309 tonnes — now 10% of its total FX reserves. The World Gold Council reports 43% of global central banks plan to increase gold holdings over the next year. This isn't speculative demand — it's a decade-long allocation shift away from dollar-denominated reserves accelerating under war conditions.
Proflex View: Bitcoin's 65–70k consolidation reflects a healthy base: panic sellers washed out, long-term holders accumulating, Iranian hashrate pressure eliminated. The key tell is a sustained weekly close above $70,000 — that confirms the base held and opens the next leg. Gold at $4,674 is structural, not speculative: China's 16-month buying streak doesn't end with this war. Both assets are functioning exactly as they should in a deglobalization environment.
🔍 What We're Watching
- March CPI (Thursday, April 10) — first oil-contaminated inflation print; the core ex-energy sub-figure is the one to watch
- Oman corridor transit volumes — the real Hormuz signal; each additional vessel is a data point toward logistics resolution
- Iran's escalation posture — April 6 deadline rejected; ground invasion risk into Monday's market open
- S&P 500 weekly close vs 6,660 — above changes the medium-term setup; below keeps the range intact
- Bank earnings (April 13–15) — Goldman, JPMorgan, Citi, BofA; investment banking pipeline = economy health check
- MicroStrategy BTC announcement — Saylor's "Back to Work" signal; watch for confirmed purchase
— Proflex Panel