Hormuz Closes, The Trend Doesn't — Yet

Bombs are back, oil is up — but the chart says shakeout, not breakdown. Where the tripwires are, plus one exit in the 10X Momentum Portfolio.

Photo by MIO ITO on Unsplash

🌍 Macro

Bombs are back and Hormuz is closed again. This time it’s less of a surprise than a few months ago. Still, it’s bad news for stocks through the usual channels: energy prices, inflation expectations, and rates.

So I’m back to monitoring oil — which, notably, is not exploding:

While the 10-year Treasury yield is rising:

Not a reason to sell — but a reason to raise our guard. The trend is intact; the risk is duration. The longer the crisis persists, the worse for risk assets like stocks and crypto. Below, what the charts say and where the tripwires are.

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📊 Index — S&P 500

Insight. The S&P 500 closed Friday at 7,575, at all-time highs, above all rising weekly moving averages. But momentum is quietly fading: the weekly MACD histogram has been shrinking since late May, and the index trades ~2.4% above its 10-week average. Stretched, tired, not broken. Then the weekend: Hormuz closed again, Brent up ~4%, futures pointing to a -1.5% open.

Implication. A pullback to the 10-week average (~7,400) is normal digestion — and roughly where Monday opens. The trend is intact unless we see weekly closes below the 30-week average (~7,100). We’ve seen this movie in March: -9% peak-to-trough, full recovery in 10 weeks while headlines were still terrible. Posture: hold, honor stops, no panic selling. The line that matters is 7,100, not the news flow.

🔄 Sectors

Insight. Offense still leads: Technology (XLK) and High Beta (SPHB) top the 6-month board. The Risk Appetite Ratio (High Beta vs Low Volatility) is firmly bullish. One anomaly: Defense stocks (ITA, the aerospace & defense ETF) fell -4.7% last week despite escalation — the market is not pricing a wider war. Energy (XLE, the oil & gas sector ETF) jumped +3.7% before the weekend.

Implication. No defensive rotation yet = the market treats this as a supply shock, not a growth shock. What would change the read: high-yield credit spreads widening, or the Risk Appetite Ratio rolling over. Watch those two. Energy works as a hedge here — but as a trade, not a long-term holding. Oil profits are cycle artifacts, not durable franchises.

🌍 Themes

Insight. The rotation we flagged is now visible in the data. Semiconductors (SMH) are still #1 on 6-month strength but negative over the past month. Meanwhile Biotech (XBI, the biotech innovation ETF) is +19% in a month, Cybersecurity (CIBR) +8%. Leadership is broadening away from AI hardware.

Implication. New money goes where relative strength is improving — biotech, cybersecurity, healthcare — not where it peaked. Don’t sell semiconductor leaders that hold their trend, but don’t add either. If oil stays above $90-100 for months, inflation re-enters the picture and everything gets repriced — that’s the ~25% scenario. Until then, the base case (~70%) is: bull intact, shakeout in progress, buy the leaders on weakness at their 10-week averages.

🧭 Bottom Line

The chart was asking for a pullback before Iran gave it a reason. Let the next 2-3 weekly closes tell you which scenario is playing out. Sell nothing the stops don’t tell you to sell.

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💼 Portfolios

💼 10X Momentum Portfolio

Below is the current portfolio and scorecard. One action this week: selling ROKU at the open. Fox Corporation is acquiring Roku for $160 per share in cash and stock, with closing expected in the first half of 2027. The stock is now pegged to the deal price — it can no longer trend, only converge. Dead money for a momentum book, so it goes. ROKU exits with a +12.6% gain (85% annualized) since entry. No new positions this week.

💼 10X Easy Doubles Portfolio

Last week my buy-stop order for DLO was triggered. Below is what the portfolio looks like now. No action this week.

💼 10X Best of ARKK Portfolio

Heads up: next week it’s time for the periodic review — what to keep, what to sell, what to add, based on the methodology described at the link below.

Since inception in October 2024, the portfolio has returned 166% (75% annualized) versus 69% for the ARK Innovation fund (ARKK) over the same period — an outperformance of 97 percentage points. See you next week with my picks!

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Not investment advice. Do your own research and consult a licensed advisor before acting.