Against the backdrop of the Iran conflict, cross-asset behavior continues to reflect a wartime rotation. Structurally, the stock market rally is now pressing into fortified resistance. The S&P 500 Index (^SPX) is approaching the 6,950 to 6,975 zone, a key defensive line, explains Buff Dormeier, chief technical analyst at Kingsview Partners.
Oil, which has been moving inversely to equities since the onset of the war, declined last week on slightly below average volume. Energy remains in a wide battlefield range between $80 and $120, with near-term support around $92. The lack of strong volume behind oil’s drop suggests that even this front is consolidating to support.
S&P 500 Index (^SPX)
Market breadth has continued to build off last week’s breakout, but is now also nearing resistance, where prior advances have stalled. While price recently advanced, the number of command units driving the move was more limited. Participation is improving, but conviction was more selective.
In summary, neither side has delivered a decisive outcome. The bulls have advanced, but not with sufficient force to break through entrenched resistance. The bears led a successful charge south but have thus far failed to break the upward trend.
The battlefield now centers on clearly defined levels. Resistance stands near S&P 500 6,975, while oil support rests near $80. A weekly break of these levels would “prove it,” signaling that the bulls have finally “put up.” Failure at these levels would reinforce the view that this rally is stuck in a directionless channel.
