Proflex Market Update - Wk 12

Post-Witching Reset | Oil Barometer | Bitcoin Rotation | The Gold Flush

The triple witching is behind us. $5.7 trillion in options expired on March 20, the largest March expiry in Citigroup data since 1996, and the market did exactly what we outlined last week, the 6700 level broke, market makers stopped defending, and the S&P slid to 6,506 by Friday's close. Four consecutive weekly losses.

But here's what matters more than the drop. ​
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The market tested 6500 intraday and bounced. That is the same support zone from October and November last year. RSI levels are deeply oversold. And the structural selling pressure from dealer hedging that amplified every move for weeks just rolled off. The scaffolding is gone, but so is the accelerant.

As Raman noted on this week's All-Access Subscriber call:

The war is now in its fourth week. Oil remains the barometer. And two things happened over the weekend that shift the calculus.

Key Drivers This Week

Trump's 5-Day Strike Pause: The First Real De-escalation Signal

After three weeks of sustained US and Israeli strikes on Iranian military infrastructure, Trump announced on Sunday a 5-day delay on all strikes targeting Iranian energy assets. Oil tumbled on the headline.

This is the first concrete step toward the resolution thesis we laid out in Week 10. The war objective was redefined early from regime change to nuclear facilities, and now the energy infrastructure is being taken off the target list, even if temporarily. The political incentive is enormous: gas prices are a third rail.

Simultaneously, sanctions on Iranian oil already loaded on ships have been relaxed through April 19, putting an estimated 140 million barrels back into the global market.
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The Jones Act has been suspended for shipping relief, and even some Russian oil sanctions have been temporarily lifted. These are not the actions of an administration planning a prolonged conflict.

The Strait of Hormuz remains effectively closed, with only 21 tanker transits in the past 7 days versus 100+ daily before the crisis.
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But Operation Epic Escort is now live, with global convoy participation forming. First escorted convoys could move within 7 to 21 days once corridors are secured.

The Qatar LNG damage is the one piece that doesn't resolve quickly.

17% of Qatar's LNG capacity is offline, with rebuild estimates of 3 to 5 years and an estimated $20 billion in annual revenue loss. This is structural and will keep energy prices elevated beyond any ceasefire.

The Post-Witching Setup: Less Pressure, More Opportunity

The market maker dynamics that dominated the last two weeks have fundamentally shifted. With 35% of US options exposure rolling off on Friday, the mechanical selling that amplified every downtick is gone, and dealers no longer need to hedge as aggressively.

The Fed held rates at 3.50–3.75% on March 18 as expected. The dot plot still projects 3.4% by year end, but 7 of 19 FOMC members now signal zero cuts in 2026, up from 6 in December.
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The market is pricing the first credible cut window in June at about 47% odds. February CPI came in at 2.4% headline, 2.5% core, stable but still above target. The oil shock hasn’t hit CPI yet.
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The macro picture remains what we've been calling a fragile stability: Q4 GDP at 0.7%, payrolls down 92,000, unemployment at 4.4%.
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Growth is slowing while oil pushes costs higher.
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But as Raman emphasized, wars don't create recessions. Wars create spending. Nominal GDP keeps growing even if real GDP softens.

The 10-year at 4.4% remains the key level to watch. Bonds are failing as a safe haven because this is an energy supply shock, not a demand collapse.

Bitcoin's Quiet Victory Lap

While equities bled, gold crashed, and bonds failed, Bitcoin did something remarkable. Since the Iran stress began, Bitcoin is up roughly 5-6%, while gold fell 9.8%. The asset that was supposed to be risk-on is acting as the most resilient store of value.
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We've been tracking this divergence since Week 10. The explanation is structural, not sentimental. All the deleveraging in crypto already happened. Long-term holder net selling collapsed from 243,737 BTC to 31,967 BTC, an 87% reduction. The weak hands are gone.

Bitcoin ETF flows confirm it. March saw $8 billion in inflows, with IBIT alone capturing $8.4 billion in Q1 and 45% market share. This is institutional, not retail.

Gold and Silver: The Speculative Flush We Called

We have been warning about gold and silver entering a speculative zone for weeks, and this correction has validated that call. Gold has dropped from above $5,200 to $4,300–$4,400, while silver collapsed from $122 to around $65-70 levels. This is a full speculative flush.

The mechanism is straightforward: high volatility drives margin pressure, forcing leveraged players to liquidate. In a war scenario you'd expect gold to rally, but instead, anything overleveraged is getting unwound.

Gold’s 200-day moving average sits near $4,079, and price remains above it. The structural bid from central banks and de-dollarization hasn’t changed, but the speculative excess needed to wash out.

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🧭 Proflex Playbook – Discipline Over Direction
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​The market is caught between a geopolitical crisis it can't model and a structural expiry event it can time to the hour. This is a week for tactical discipline.
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Our conviction stays anchored in the data:

• Focus on Structural Growth: Continue to overweight the secular AI theme, recognizing its multi-year runway.
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• Anticipate Shallow Corrections: Use dips as accumulation opportunities, not reasons for fear, understanding that "none of the corrections stick."
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• Diversify Thoughtfully: Recognize the "decorrelation" across asset classes; consider gold, silver and Bitcoin for portfolio resilience.
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• Develop Mental Models: Prioritize long-term planning (6-12 months out) over short-term news, aiming for consistent, incremental gains.

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If you're an All-Access or Managed Portfolio subscriber, our positioning has already shifted ahead of this moment—scaling up asymmetric hard asset plays while hedging for earnings volatility and geopolitical tail risks.

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Until next week,
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— The Proflex Team
​ Trusted Macro Insights. Calm Investing. Tactical Trades.