| Hello, Fellow ChartWatchers! |
This past Friday brought an unexpected turn to the market, as news of Israel’s airstrikes on Iran put a halt to what had been a slow-but-steady climb. Geopolitical tensions can feel unsettling at different levels, and it’s not unusual to question how such an event will change the market’s dynamics.
Looking at the major indexes, the S&P 500 ($SPX) and Nasdaq Composite ($COMPQ) are both trading above their 21-day exponential moving average (EMA). As long as that remains the case, consider the uptrend to still be in play. The big question, of course, is whether both indices will continue to hold above their 21-day EMA.
To help you keep an eye on the market’s direction, we often look at tools like the McClellan Summation Index ($NYSI). It’s like a compass for the overall market. You can see it in action with the chart below, which shows the $NYSI overlaid on the NYSE Composite Index ($NYA).
 Since the April low, you can see how $NYSI and $NYA have been moving higher together. But towards the end of May, $NYSI pulled back while $NYA continued to rise. This divergence can sometimes be an early warning sign to pay closer attention. In early June, $NYSI reversed and moved higher, back in sync with the NYSE. Both dipped slightly on Friday, after the selloff in equities.
Here’s a key point to watch: If $NYSI moves beyond its previous high of 688.53, it would suggest continued strength for the NYSE. If it doesn’t, it could signal a tougher road ahead for the bulls. To keep track of this, consider saving the above chart to your StockCharts ChartLists, which subscribers can do by clicking the above chart and saving. This is a great way to monitor these movements yourself during this somewhat “jittery” period.
It’s natural to feel a bit on edge when geopolitical tensions rise, especially heading into the weekend. We’re sure many of you will be keeping an eye on the news. Next week, a major event on the calendar is the FOMC meeting. While an interest rate cut isn’t expected, Chairman Powell’s press conference afterward could offer important clues about what we can expect in the coming months.
What started as a relatively quiet week certainly ended with some volatility. While there’s a bit of “weekend risk” with news unfolding, do take some time out to relax and recharge.
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| Have a restful weekend, and to all the dads out there, Happy Father’s Day! |
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