The Hormuz Bypass Is Shut

Saudi Arabia shut the pipeline that goes around Hormuz. Drones out of Iraq hit the East-West line Thursday, Riyadh closed it Friday as a precaution with no date to reopen, and on Sunday a merchant vessel was struck inside the strait, one crew member killed. That line moves up to 7 million barrels a day and was the main way Gulf crude got out without crossing the strait. Brent is above $108 and WTI over $103, both up more than 3%, two sessions after crude cracked back under $100. Then the AI complex took its own hit: Dario Amodei published an essay Saturday saying AI companies must slow the pace at which they improve their models, Sam Altman agreed that the industry needs to pace the frontier, and Nasdaq futures are down 1.5% against 0.6% on the S&P. SPX closed 7,656.98 Friday, up 0.86%, with the Dow up 509.19 points to 52,573.29 and the Nasdaq 1% higher at 26,333.04, and all three still lost on the week. Premarket 7,612, down 45.

Friday's rally stood on two legs and both went over the weekend. The 0.86% came from crude giving back the $100 and from Oracle being bought for holding its capex line flat, and by Monday crude has taken back the whole give-back while the AI trade is selling on the demand side for the first time in this run. For six weeks the chips were sold on what the build costs, the capex lines first and then the financing. This is different. The two labs the build is for said pace the frontier, and the Kospi fell 3.26% on it, which is the memory arc from the other end. The hike that was 72% Friday morning is 86% now, the two-year is 4.64% after adding 26 basis points in a week, and the ten-year sits near 4.97%, around its highest since October 2023. Wednesday is no longer a decision. What Warsh says about the next one is.

The structure is the ugliest since August 18, built the same way. Premarket 7,612 is 33 under the flip at 7,645 and inside the heaviest negative cluster on the profile, with 7,615, 7,605 and the put wall at 7,600 all within twelve points of price and close to -10,000 packed between 7,600 and 7,620. Dealers amplify here rather than damp. The call wall at 7,675 is only +343, the smallest of this run, so there is no cap overhead and no magnet either. Positive gamma above the flip sums to under +4,000 against roughly -36,000 below it, nine to one. The 50-day at 7,607 and prior demand at 7,598 sit on the put wall, and the 8-week EMA at 7,647 sits on the flip.

The lean is short, and rallies are for fading until 7,647 is reclaimed, flip and 8-week EMA together. The first sell is 7,631, prior demand at the top of the negative band. Do not press a short into 7,598 to 7,607: a put wall twelve points under price is the most reactive level of the session, and the first touch bounces hard. A close under 7,598 is the decisive event, and the negatives run unbroken from there to 7,550.