Good evening, everyone. I’ve organized the key takeaways from the March 19 session into a written recap that can be read directly, so anyone who missed the livestream can catch up and review the discussion.
You can follow along with my class notes to see how Mr. Gan analyzed the market.
Mr. Gan focused on the crude oil market, related financial instruments, and trading strategy. He discussed the impact of the Iran nuclear talks and the Strait of Hormuz blockade on oil prices, while also looking at the trading opportunities and broader market trends created by higher oil prices. The main points are as follows:
Course Review ：Gold & Silver Tumbled: What’s the Next Trade?
Impact of the Strait of Hormuz Blockade
Impact on Energy Supply
Supply disruption: After the Strait of Hormuz was blocked, crude oil and natural gas exports from Kuwait, Iraq, Saudi Arabia, Qatar, and the UAE were affected. Roughly 30% of global energy shipments pass through the strait, so if the blockade continues, oil transportation becomes more difficult and some oil wells may need to reduce output or shut down.
Higher costs: Institutional analysts expect that if the blockade lasts for about a month, from early March to early April, crude oil costs will rise and push commodity prices higher as well. The impact should show up more clearly in April inflation data.
Impact on Market Expectations
Short term vs. long term: The market initially viewed this as a short-lived event, but the Strait of Hormuz blockade has now shifted from a short-term disruption to a more persistent one. The observation window may have to be extended from a matter of days to a matter of months.
Faster inflation: If the strait is still not reopened by April, negative expectations for the economy could intensify, inflation pressures could worsen, oil prices could potentially double, and energy costs could rise sharply, creating a much bigger drag on growth.
Crude Oil Market $美国原油ETF(USO)$ $WTI原油主连 2605(CLmain)$
Price Action
Front-month contracts: The April dollar-denominated crude oil futures contract briefly reached as high as $119 before pulling back, but longer-dated contracts have still not fully moved back below $100. That suggests oil may still have upside momentum.
Technical indicator: The 20-day moving average is a key reference for crude oil. As long as price does not break below that level, it is too early to conclude that the oil rally is over.
Trading View
Longer-dated contracts: For investors who have not participated in the oil trade yet, longer-dated contracts such as September or December may be worth watching. The calendar spread is more obvious, the entry price is relatively cheaper, the risk profile is better, but the volatility is also weaker.
Watch the headlines: Once most contracts move above $100, traders need to watch closely for any major reversal signal from the news flow.
U.S. Equity Indices $纳指100ETF(QQQ)$ $纳指三倍做多ETF(TQQQ)$ $微型SP500指数主连 2606(MESmain)$ $微型SP500指数2603(MES2603)$
Short-Term Trend
Technical level: Watch the 20-week moving average. If the index breaks below it, hedging measures should be considered, such as buying put options, shorting index futures, or reducing stock exposure.
Historical reference: From February to April last year, the U.S. tariff shock triggered a rapid correction in S&P 500 futures, with a drawdown of 21%. U.S. equity indices have not accelerated lower yet this time, but the setup still calls for caution.
Medium- to Long-Term Trend
Key support: The 20-month moving average is the more important medium-term level. Around 6,250 on the S&P 500 is a major line in the sand. If that support fails, the index could transition into a bear-market structure.
Drawdown reference: Historically, a normal U.S. equity bear market often sees a decline of around 30%, while extreme cases can reach 50%. So far, the drawdown is still less than 10%.
Other Trading Opportunities
Dow vs. Nasdaq relative trade: The Nasdaq-to-Dow ratio is sitting in a historically elevated range. One possible strategy is to go long the Dow or the S&P while shorting the Nasdaq, but position sizing needs to be managed carefully.
Euro futures trade: The logic here is that the Strait of Hormuz blockade could drive inflation higher, push the Fed to stop cutting rates or even hike again, and shift risk aversion toward holding dollars. That makes shorting euro futures a way to express a bullish dollar view.
Technical setup: Euro futures became shortable after breaking below the neckline last week. The euro has since seen a mild rebound, so the key question now is whether it can break back above the yellow line. If not, the downside could accelerate further, and EUR/USD could challenge parity.
Agricultural products: Within agriculture, soybeans and soybean oil have already moved, while soybean meal looks more like a lagging contract. If soybean oil starts to lose momentum, soybean meal may catch up, especially because it is a staple input for livestock feed.
Trading suggestion: It is not a good idea to chase contracts that have already rallied sharply. Soybean meal is the one to watch, preferably through longer-dated contracts.
Precious Metals and Follow-Up Plan $微型大豆主连 2605(MZSmain)$ $小大豆主连 2605(XKmain)$
Gold: The 20-week moving average is the key support within the bull-trend channel. If gold breaks below 4,650, it could trigger a long liquidation event, and historical drawdowns in that kind of move can reach 20% to 30%.
Trading view: Front-month gold is already close to that level. If support holds, the market may move into a range. If it breaks, then it makes more sense to assess the downside based on prior historical drawdowns rather than rush to buy the dip.
Silver: Silver is more speculative. It was previously driven higher by the inventory story and solar demand, but prices pulled back sharply before delivery. That makes bottom-fishing in silver especially risky, and gold support should be watched first. $微型豆粕主连 2605(MZMmain)$ $豆粕主连 2605(ZMmain)$
Market preference: The market is favoring essential-demand resources such as crude oil and agricultural products. In a weak economic environment, these basic necessity-linked commodities tend to outperform, and the same framework can also be used when watching domestic futures markets.
Follow-up plan: Continue tracking whether the Strait of Hormuz reopens, along with April inflation data and broader market changes. Also keep monitoring crude oil, U.S. equity indices, euro futures, agricultural products, and precious metals, and adjust strategy based on how the market evolves. We’ll continue sharing market views and trading opportunities at the same time next week.
Key Takeaways
The impact of the Strait of Hormuz blockade on April inflation and the oil market: This section focused on how the blockade affects crude production and inflation. The original assumption was that the blockade would last roughly one month. Since the event began in early March, the impact of higher costs may show up in April, including broader commodity inflation and more visible upside pressure in inflation data. If shipping resumes before April, the inflation impact may remain limited. If not, inflation could accelerate. There are reports that Iran may charge transit fees, but whether those reports are accurate and whether oil can move smoothly still remain open questions, so price action is the best guide.
Technical analysis on crude oil and the case for longer-dated contracts: This section focused on oil trading strategy. The suggestion was to watch the 20-day moving average as the main technical reference. The weighted oil index chart showed that the front-month April contract reached $119 before pulling back, while longer-dated contracts have not fully broken below $100. That means the move may not be over. For investors not yet involved, September or December contracts may offer a better balance of price and risk, especially if the index eventually pushes back above $100.
Higher oil prices could push markets into a stagflation framework: This section argued that if oil continues to rise, it will weigh on the global economy and worsen inflation. A 40-basis-point rise in inflation could be enough to push the U.S. into a stagflation-like environment, where growth stalls while inflation continues to rise. In that setup, U.S. equity indices would likely stay relatively weak, while necessity-driven commodities such as crude oil and agricultural products would likely stay comparatively strong.
Short-term hedging and medium-term support in U.S. equity indices: This section focused on U.S. equities. In the short run, the 20-week moving average is the key line to watch. If it breaks, traders should hedge or reduce exposure, and if price has not reclaimed it, bottom-fishing is not advisable. Last year’s tariff-driven correction from February to April caused a fast drop in S&P 500 futures, and while the current decline tied to the U.S.-Iran shock has not accelerated yet, it still needs close monitoring. Over the medium term, the 20-month moving average matters more, with 6,250 on the S&P as a major support zone. If that level gives way, the market may move into a bear trend.
U.S. equity index strategy and the Nasdaq-vs.-Dow relative-value trade: This section discussed a trade that does not depend on the broader market direction. The speaker pointed out that the Nasdaq tends to have larger downside swings when equities fall, and the Nasdaq-to-Dow ratio is now in a historically elevated zone. In 2021, that ratio once corrected by 30% very quickly. In that type of setup, going long the Dow or S&P while shorting the Nasdaq could generate significant relative returns. At the same time, index trades often take longer to play out and can be volatile along the way, so position sizing remains critical.
Why the Strait of Hormuz situation could support the dollar: This section revisited last week’s argument that the Dollar Index could see a fast, pulse-like move higher. The logic is that if the Strait remains closed, inflation data could rise enough to force the Fed to stop cutting rates or even consider hiking again, which would flip the market narrative. Risk aversion could then shift toward holding dollar cash, pushing the Dollar Index sharply higher. On that view, holding dollars may be a more efficient hedge than holding gold at current prices.
How to trade a stronger dollar through euro futures: This section suggested expressing a bullish dollar view through euro futures. CME euro futures under the 6E code can be used for that setup. After the neckline break last week, shorting the euro made tactical sense. The euro has since bounced slightly, which could simply be a technical retest. If it fails to break higher, the decline may accelerate again. Based on the historical pattern discussed in the session, euro futures could eventually imply a test of EUR/USD parity, and the risk-reward may be better than in precious metals because metals tend to be harder to manage from a volatility perspective.
Agricultural trade ideas, with soybean meal as the lagging opportunity: This section looked at agriculture and argued that necessity-driven ag products often rally in short, pulse-like moves lasting roughly three to four months. Although U.S. soybeans corrected this week, they had already moved earlier, so chasing them higher does not look attractive. For anyone still looking at agriculture, U.S. soybean meal may be the better lagging opportunity. If soybean oil stops rising, crushers may shift profit emphasis toward meal, forcing soybean meal to catch up. That makes it a contract worth tracking closely.
Agriculture, precious metals, and the Halo-style trading framework: This section briefly returned to agriculture before shifting to precious metals. Gold has fallen quickly in recent days, and the key level to watch is 4,650. If that support breaks, traders should judge the downside using historical drawdown patterns rather than rush into a dip-buying trade. Silver is even more speculative, so bottom-fishing there looks even less attractive. The session closed with a Halo-style framework centered on necessity-driven resources such as oil and agricultural products.
Why gold broke lower and how to handle the volatility: This section ended with a reminder that viewers could leave questions in the comments. The speaker noted that gold had already broken lower and that the key question was whether it could recover by the close. The reason for the pullback was that the Fed meeting confirmed a rate-cut path that was not as dovish as the market had hoped. Gold had previously rallied on rate-cut expectations and geopolitical stress. Traders were reminded to respect the risk of a fast long liquidation move and, where possible, to consider option hedges while managing short-term volatility carefully.
China soybean meal: pricing logic and trade setup: This final section focused on Chinese soybean meal futures. The speaker said the same logic broadly applies in China, since soybeans are heavily import-dependent and demand is tied to the livestock industry, especially hog producers, whose feed costs are difficult to control. That gives soybean meal a fundamental pricing advantage. The suggestion was again to use longer-dated contracts rather than front-month exposure. The speaker also noted that this year may offer more trading opportunities with clearer setups, especially in commodities that have not yet moved, and said those themes would continue to be tracked next week.
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