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With all eyes on the Iran conflict and its potential global economic consequences, it’s no surprise that the equities market has struggled in recent sessions. In fact, the benchmark SPDR S&P 500 ETF Trust (SPY) recently flashed a rare technical signal. In the trailing 10 weeks, while seven of the weekly candlesticks were positive (green bars), the overall slope during this period was negative.
Frankly, I don’t want to read too much into low-sample-size events. However, of the handful of times that this market structure has flashed since the beginning of 2009, the implications for the S&P 500 have historically been negative. Granted, while there’s nothing about past observations that logically compels a future outcome, the inductive warning does make some sense.
