$SPY Breaks 200SMA: War Risk Points to $627

Michael Esther
08:23

Last year, $SPDR S&P 500 ETF Trust(SPY)$ crashed 17% from $580 to $480 when Trump threatened Tariffs.

It took 6 weeks before SPY reclaimed it!

This year, Trump says no ceasefire with Iran. SPY broke 200SMA at $660 on Wednesday.

This is NOT GOOD:

1. US–Iran War → Uncertainty + Inflation

Geopolitical instability raises risk premiums and keeps inflation sticky, pressuring equities.

2. Oil Spike → Cost Shock Across Economy

Higher oil flows into food, transport, and shelter → squeezes consumers and margins.

3. Energy Strain → Data Centers & Chips Hit

AI + data centers require massive power → rising energy costs hurt tech growth multiples.

4. FOMC Risk → Higher for Longer Rates

Sticky inflation + war risk = Fed stays hawkish → valuation compression continuesSPY just lost the 200SMA again.

The probability of 10% (if WAR continues through April) is 80% so about $627.

But, if the war ends quickly by the end of March, then we will get a big V-shape recovery.

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