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Despite oil rising 5%, markets hit all-time highs. With 9 bullish weeks straight (10/11 for Nasdaq), a proper strategy mix is vital as we eye a 10th green week. [tap to join us for the Daily Profit Plan]
I’ve been watching something unfold in the commodity markets that, frankly, has me scratching my head — and it should have your attention too…
While everyone is celebrating another week of new highs in the major indices, there’s a massive red flag waving in the energy markets that’s being completely ignored.
And when markets start ignoring major inflationary pressures like this, it rarely ends well.
Here’s what I’m seeing that has me concerned…
Oil is trading at around $90 WTI, and it just executed a powerful technical bounce that should be making equity traders nervous.
We’re talking about a clean move from $86 back to $92 off the 100-day moving average — not a minor fluctuation, but a significant bid coming into crude at elevated levels.
And yet, if you look at the major equity indices sitting at all-time highs, you’d think oil was trading at $60.
The Disconnect That Doesn’t Make Sense
Let me ask you this: How can equities maintain these valuations with no apparent pressure when oil catches a bid like that?
Oil at $90 isn’t just a number on a chart — it feeds directly into inflation metrics that actually matter. We’ve got CPI and PCE data coming in the next few weeks, and persistently high energy prices have a way of showing up in those reports.
With jobs data, inflation prints, and a major options expiration all hitting soon, the stage is set for heightened volatility. But right now? The market is acting like it doesn’t exist.
This complacency becomes even more dangerous when you look beneath the surface. AI and semiconductor names remain aggressively priced yet are showing signs of strain. Gold and silver are leaking lower.
Bitcoin is struggling under its 200-day moving average and failing to participate in the broader risk rally.
When leadership groups, defensive assets, and digital assets all send conflicting signals, you’re looking at a correlation breakdown that typically precedes volatility.
Meanwhile, the options market is already pricing in turbulence. Implied volatility levels across many leading stocks remain elevated, signaling that professional traders are hedging aggressively.
When IV runs hot like this, it only takes a small flinch for overextended stocks to give back gains just as fast as they made them, especially with so much retail FOMO crowding the trade.
What This Means for Your Positioning
The market’s been on a nine-week winning streak, and when you combine that extended run with oil ignoring equity complacency while trading at these elevated levels, you’ve got the ingredients for increased volatility in the coming weeks.
Such uninterrupted runs have only occurred four times since 1965, making today’s market statistically extraordinary and vulnerable to mean reversion.
At the same time, we’re seeing classic technical divergence form. Daily charts are stretched into overbought territory, yet money flow has been drifting lower as indices push to new highs.
When momentum rolls over while price continues climbing, it often signals an approaching pause or pullback.
This is why I’ve been implementing crash insurance and preparing for potential turbulence over the next three to four weeks.
I’m buying long-dated puts to capture asymmetric gains from a possible 3% to 5% correction over the summer — a low-cost way to position for a move that could unfold quickly once markets stop ignoring these warning signs.
The smart play isn’t to panic. It’s to recognize the disconnect, understand the risk it represents, and position accordingly.
Because when markets finally wake up to what they’ve been ignoring, the adjustment tends to happen quickly.
I’ll see you in the markets.
Chris Pulver
Chris Pulver TradingÂ
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