To The Moon

US Market Recovers ?

In a ‘surprise’ twist, US market bounced back on Mon, 16 Jun 2025 from its Friday slide, as Israel & Iran - strikes and counterstrikes continue to play out against each other.

This as Wall Street began to look thru the conflict and ahead to this week’s Federal Open Market Committee (FOMC) meeting starting on Tue, 17 Jun 2025.

The Real Catalyst.

Stocks picked up some steam early in the session after reports surfaced that Iran has signaled it wants to de-escalate conflict with Israel and resume negotiations with US over its nuclear programs. (see below)

US market even recovered fully from Friday's slide intraday, indicating that Wall Street is growing less concerned about the Israel-Iran conflict.

US Market : 16 Jun 2025.

By the time market closed for this short-trading week: (see above)

• DJIA: +0.75% (+317.30 to 42,515.09).

• S&P 500: +0.94% (+56.14 to 6,033.11). Posted 16 new 52-week highs and 5 new 52-week lows.

• Nasdaq: +1.52% (+294.39 to 19,701.21). Registered its biggest daily percentage gain since 27 May 2025.

Advancing issues outnumbered decliners by a 1.97-to-1 ratio on NYSE and by a 1.9-to-1 ratio on Nasdaq.

Trading volume on US exchanges was 17.86 billion shares, compared with 18.14 billion average for the full session over the last 20 trading days.

What Else Is Interesting ?

According to LPL Financial, Chief equity strategist, Jeff Buchbinder:

• Throughout history, although every conflict is unique, US stocks have usually remained strong during major geopolitical events since 1941.

• On average, stock prices have dropped by about -4.6% over 19 days during these events.

• Usually it takes about 40 days for stocks to return to their previous levels.

• Meaning, the impact usually lasts only a few weeks to a couple of months.

Oil Stock and Energy Sector Index.

Oil prices retreated once news of Iran seeking “truce” was plastered over the media.

As of 17 Jun 2025

Brent crude futures fell about -1.3% to $73.23 after spiking last Friday. (see above)

The $Energy Select Sector SPDR Fund(XLE)$ also lagged behind the broader market. (see above)

17 Jun 2025 - Outlook.

On Monday, the S&P 500 closed higher by +0.94% and erased much of Friday’s losses.

However, it remains within the band of resistance. that is between 5900 & 6100. (see above)

S&P 500's RSI and MACD

At the same time, a negative divergence of MACD and RSI that has been recorded since 20 May 2025 highlights (a) upside exhaustion, (b) lending the S&P 500 to a pullback becomes quite normal, regardless of the reason, at this time of year. 

As of 16 Jun 2025, the S&P 500 index’s 20-day moving average (ma) at 5,948 is an important level.

• If US market stays above this number, short- and medium-term trend remains strong.

• If it falls below 5,948, the trend could turn weaker.

The first main period when stocks usually weaken is happening now, from June 14 - 27.

With (a) Israel-Iran conflict still in-progress and (b) US military continual support for Ukraine still unpledged - volatility is expected to remain high in the coming weeks.

US market is expected to remain volatile in the coming weeks due to:

• Israel-Iran conflict still in-progress.

• Trump left G7 summit early to focus on the Middle East situation.

• US (Trump) has not promised to keep helping Ukraine in its war with Russia.

Analysts all recommended caution as US market is trading close to fair value with limited safety margins.

Now might not be a good time to make new investments. There may be better chances to invest before the end of June 2025. What do you think ?

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• Do you think US market will pull back this week OR zoom higher ?

• Do you think now would be a great time to pick up bargains if US market corrects itself’?

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