WC-6/16: Expect a Good Week
Market is breathing with AI consolidation and growing tensions in the Middle East
Given the accurate prediction of last year's mild week, we expect a similar market environment this week—but with a twist. While last year featured low volatility and moderate strength, this week carries the potential for short bursts of volatility due to rising geopolitical tensions (see “Market Catalysts” below). That said, movement should stay relatively contained as investors look ahead to Q2 earnings kicking off June 30. Expect tight trading ranges across the S&P 500 and tech-heavy names as the market navigates mixed signals from both technical and macro indicators.
S&P 500 RSI: 68.38 with strong momentum and approaching a local peak
Since last week, the RSI has oscillated constantly around the 50-60 range, with a huge shot up on Friday following the conflict between Israel and Iran. The market has since then been trading with huge momentum and as seen, is approaching the line of a RSI of 70. Near this approach, there are historical trends which indicate a temporary reverse downwards. However, ride out the market for this next week with an expectation of approaching this peak value near the red line.
McClellan Oscillator (S&P 500): -5.59 and declining
If we look at previous trends, as seen in March, it is evident that after some period of positive breadth, there is constant negative breadth for a few days. This is minimal, and nothing to be alarmed. This just indicates that the market is slowing down and experiencing mild hesitation and weakness. While this may be counterintuitive in terms of the analysis of the RSI above, which shows a strong upward momentum nearing overbought levels (68), it actually supports our prediction. A high RSI (such as 68) suggests bullish trends and recent gains, but the slight dip in breadth signals that fewer stocks are participating in the rally. This divergence often precedes a short-term pullback or consolidation phase, where the market pauses to digest recent gains before moving forward. Therefore, while the momentum remains strong, the weakening breadth serves as a caution flag for potential decline in a few weeks from now. So, ride the wave for this week.
This Week’s Market Catalysts: Speculation of U.S. Involvement in the Israel-Iran “Conflict”
The U.S.—and specifically Donald Trump—has a long history of intermediation in geopolitical conflicts across the Middle East. With rising tensions between Israel, a key American ally, and Iran, speculation is rising around potential U.S. involvement. While nothing has been confirmed, the market has already begun to price in this uncertainty. Historically, the onset of conflict has led to short-term bullish momentum in certain sectors, especially defense, cybersecurity, and AI-driven surveillance. Unfortunately, companies like Palantir (PLTR), Raytheon (RTX), and Lockheed Martin (LMT) typically benefit from increased government contracts and investor sentiment tied to military escalation.
While it’s tempting to jump into these names on speculation alone, caution is key. Watch for confirmed reports on the U.S. position before making aggressive moves. If involvement becomes likely, expect a surge in demand for digital warfare and intelligence firms. For now, hold your positions, stay informed, and avoid exposing your portfolio in anticipation of headlines that haven’t been released.