SPY’s on balance volume is back to the 2021 high. The price during that 2021 high was $480. The price now is $657. Despite on balance volume fully retracing, the price is still nearly 40% higher. Major divergence. Darden Restaurants Inc (DRI) is even worse. OBV made a high in 2021 and has not been able to break it since, despite price rising 40% to a new ATH. A major bearish divergence: I expect I would find plenty more examples of this throughout the stock market. The market seems totally complacent about the war in Iran which is shaping up to be a brutally-painful-for-the-economy, protracted war.

I attribute the lack of a response to this seismic news to the market being too exhausted to process another geopolitical story. After Trump’s liberation day, previous attacks on Iran, and the operation in Venezuela, the market learned that if you don’t respond to these events, everything will be okay. Which worked then, but will not work now.

If GLD has a major selloff I will be purchasing the longest leaps I can at a 550 breakeven. Probably a few months of liquidity driven selling before the sustained bid appears during this conflict, and during that time if I can get a great deal on those calls, I will be taking it. Would be a great trade. Gold is a nice opportunity to express a bearish sentiment but without the disadvantages that come with taking a short position.

Edit 10pm March 20: Lots of people have talked about how the initial spike on the VIX was the peak of this event. While we haven’t surpassed it yet, just look back at previous spikes. VIX likes to spike quickly and mean-revert just as fast. Right now, it’s staying elevated, putting in higher lows as it seems to be building up energy to move higher. To me, this looks like it’s building momentum to keep climbing.

Ultimately I think people just cannot believe this is actually happening. They know it’s bad, but they’ve seen a lot of potentially bad things that didn’t resolve that way in the past, so they treat this as another one of those. It’s impossible to comprehend that the United States is waging a war that will destroy the global economy and which doesn’t even benefit their country. They have to pull out, right?

If this were a rational war from the start, you could expect it to end rationally. But it’s not.