Weekly Market Review — W/C 25th May 2026
- John Nwatu MSTA CFTe
- May 26
- 2 min read
Rating: Risk-On | Bias: Selectively Bullish · Technically Led
The Big Picture
Positive news on the prospects of a deal to reopen the Strait of Hormuz has shifted the tone meaningfully this week. Equity markets gapped higher over the weekend reflecting that relief, and the broader cross-asset picture is confirming the move.
The VIX has declined further and is holding below 20. That is the clearest real-time read on market fear, and right now it is saying risk appetite is in play. Credit spreads are sitting around 2.8%, consistent with an environment where investors are comfortable taking on risk. 10-year yields declined on the Hormuz news as the inflation risk premium partially unwound. It is too early to call a confirmed downtrend in yields, but the direction of travel this week is constructive for equities.
The one structural caveat worth keeping front of mind: the Fed remains hawkish and rates are not moving lower any time soon. Equities can still grind higher on earnings momentum, but the multiple expansion story that drives the really big moves requires easier monetary policy, and that is not on the table yet. The upside exists but it is measured, and likely won't be explosive.
The single biggest risk to every trade on this list is a breakdown in the Hormuz negotiations. A reversal on that front could spike oil prices, reignite inflation fears, and potentially reverse the risk-on move rapidly. That is the invalidation to watch across the board.
Primary Setups
Nasdaq 100 — Long
The Nasdaq is breaking into new highs. The technical structure is the story here. Price has cleared resistance and the momentum is with the move. In a risk-on regime with declining volatility and improving sentiment, tech leads.
The hawkish Fed is the ceiling on how far this runs, not the direction. As long as the Hormuz situation holds and VIX stays below 20, the path of least resistance is potentially higher.
Bias: Long · New highs confirmed · Invalidation: Hormuz breakdown, VIX spike above 20
DAX — Long
The DAX position is already held. The risk-on shift has provided the fundamental tailwind the trade needed. European equities were under pressure when the stagflation narrative was dominant, and this week’s geopolitical relief has changed that picture meaningfully. Price action is confirming.
Holding the position. Managing the trade rather than adding at current levels.
Bias: Long · Position held · Monitor Hormuz news closely as the primary risk
What to Watch
Hormuz negotiations. The primary binary risk. Progress confirms the regime; breakdown reverses it
VIX. Holding below 20 keeps the risk-on thesis intact
10-year yields. Watching for a series of lower highs to confirm a structural downtrend is developing
Credit spreads. Any widening above 3.2% would be an early warning signal
Nasdaq and DAX at highs. Watch for momentum divergence if price extends without volume confirmation
These are my views based on my own technical analysis at the time of writing. Nothing here is financial advice. Always do your own research and manage your risk.
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