Markets are reacting sharply to news of intensified conflict in the Middle East. Following statements from the U.S. administration regarding military actions in the Middle East, oil prices have surged (Brent crude rising over $4), which is putting immediate downward pressure on global equities. Trump declared that the core strategic objectives of Operation Epic Fury are almost met. He claimed Iran’s navy and air force have been “decimated.” However, he balanced this “near-end” rhetoric with a warning of a major escalation, stating the U.S. will hit Iran “extremely hard” over the next two to three weeks to “finish the job.”
That’s why markets are sharply down this morning and oil is spiking. Trump characterized the current spike in gas prices as a “short-term increase” and an investment in future stability. He predicted that once the conflict ends (which he hinted could be in 2–3 weeks), gas prices and Wall Street would “rapidly” recover. This tells you that a temporary bottom in the stock market could be reached in the next two weeks. This is in line with the position of the 34-day BTI. The 34-day BTI is currently at -253, a move below -400 is oversold and this coincides with a stock market bottom.