Markets Flash Green for Equities as Oil Faces Pressure

Markets are sending mixed but broadly constructive signals for equity investors, CNBC reported Tuesday, citing an analysis from technical strategist Todd Gordon of TradingAnalysis.com.

VIX and Oil Tell Two Different Stories

Gordon argues that the CBOE Volatility Index is flashing a reassuring sign for stocks. The VIX has dipped beneath its April lows, even as West Texas Intermediate crude holds above those same lows. That divergence is meaningful. Gordon believes the VIX is the leading indicator here, suggesting equity markets are in strong shape. Much of that strength, he notes, is being driven by a robust corporate earnings season.

If a durable ceasefire emerges from the ongoing Iran-related tensions, Gordon expects crude to drop sharply. He sees WTI potentially falling into the $80s per barrel, and possibly the $70s. Lower oil and a calmer VIX would both act as tailwinds for the S&P 500, which has been grinding steadily higher.

Background: How the Conflict Reshaped Markets

The year began with WTI crude trading in the $50s. Volatility was subdued and conditions appeared stable. That changed in late February when nuclear talks in Geneva broke down. Military operations launched on February 28, and Iran’s supreme leader died days later. By March 2, the Strait of Hormuz was closed. Tanker insurance was swiftly canceled, and the International Energy Agency described the situation as the most severe global energy security crisis on record.

Markets whipsawed throughout April as intermittent talks and a conditional ceasefire created brief windows of optimism. Crude and the VIX eased into May, but no lasting resolution materialized. Over the weekend, President Donald Trump claimed a deal with Iran was largely in place and that a Strait reopening announcement was imminent. Oil sold off and stocks rallied. Then fresh U.S. strikes on Iranian vessels overnight Monday complicated the picture again.

Energy Leads Tech as Airlines Recover

One underappreciated takeaway from this volatile stretch is sector performance. Energy has gained roughly 32% year-to-date. Technology, despite the continuing AI investment boom, is up around 29%. The S&P 500 as a whole has recovered to a gain of approximately 10.5% after being down about 6% earlier in the year.

The JETS airline ETF is also flashing a bullish signal. Airlines were battered by airspace closures, mass flight cancellations, and surging jet fuel costs. The ETF has now broken above its April highs, aligning with where the broader index trades. Gordon views that breakout as further confirmation that markets are positioning for an eventual resolution, even as Saudi Aramco’s CEO has warned that global oil supplies may not normalize until 2027 if Hormuz disruptions persist even a few more weeks.

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