Markets suggest stocks are on solid ground and crude oil could be in for a decline, Todd Gordon says

Markets continue to attempt to price in peace in the Middle East, but then a re-escalation of the conflict pushes back on that narrative and markets retreat, looking for a reliable theme. We're going to look at the hard right edge of the key charts that are trying to discount the expected outcome of this conflict. This is no easy task, as this market in a nutshell is violently reacting to headlines, but structurally positioning itself for a final resolution. We're going to layout the relationship between two key sectors that we'll need to see before I think we can finally hang our portfolio hats on a resolution that will reward the CNBC Pro subscriber who is properly positioned. President Trump declared a deal with Iran "largely negotiated" over the weekend, saying an announcement to reopen the Strait would be announced shortly. As a result, crude oil plummeted and stocks rallied. But then Monday night saw fresh U.S. strikes on Iranian vessels in the strait. Where markets have been Before we look to the present and future, let's remind ourselves of the history and how markets reacted. WTI crude was trading with a 5-handle (in the $50s) at the start of the year with the volatility index (VIX, orange overlaid), in the comfortable mid-teens. Nuclear talks in Geneva collapsed in February and both crude oil and volatility began to climb. The launch of Operation Epic Fury came Feb 28, followed by the death of Iran's supreme leader, Khamenei. …