Stock Market Was Due for a Breather

Is the Israel-Iran Conflict a Catalyst for a Deeper Correction?

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Today we will be covering...

  • Today, we will examine crude oil futures. Higher oil prices due to supply disruptions may harm the economy and the stock market.

Crude Oil Futures

  • How will the crude oil price be affected by the Israel-Iran conflict?

  • Below are Goldman Sachs models for Brent crude – It does not account for a possible closure of the Strait of Hormuz.

  • What do cycles say?

  • Both the daily cycle composite (upper) and the 4-year cycle (lower) suggest higher prices for crude oil futures, CL.

Sentiment & Technical Analysis

  • The CNN’s Fear & Greed Index barely moved on Friday. Complacency, or investors are betting that the Israel-Iran conflict will be a few-day affair?

  • BPSPX/VIX (SPX Bullish Percentage Index over VIX, middle window) was warning about the reversal for a few days. 

  • SPX/VIX (top) and SPX (bottom) curled down from their upper Bollinger Bands. 

  • Consider adding $BPSPX/$VIX to your pool of technical indicators.

  • It would be reasonable to expect that SPX/VIX and SPX will at least hit the lower Bollinger Band, perhaps more.

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