June 15, 2025
Weekly Market Outlook
By Geoff Bysshe
Israel and Iran are at war. Marines have been deployed against American citizens, and elected US Congress members have been assassinated.
Regardless of your political views, it’s hard not to agree that the current geopolitical environment is disturbing and filled with uncertainty.
Let’s look at what the market had to say about it. Here’s one way that I encourage members of our daily mentoring membership group to do this.
Ask and answer these questions related to the performance of market indexes, important asset classes, and sectors:
After these questions above have answers…
Everything you need to answer all these questions is in our free area of Big View, with additional depth available to premium Big View members.
Here are the answers to the questions above:
In the chart below from the “US Equities & Comments” section you can see that:
If we see a few close and continue patterns through the 10-day MAs, it’s a short-term bearish warning, but a resumption of the trend higher after closing under the 10-day is bullish!
Below, you’ll see our “Sector Summary” table, which is sorted by 3-month performance, highlighted in red. I also highlighted how the top 5 and bottom 5 sectors or indices performed over the last 5 days.
Looking at the best performers over the last three months, it’s not surprising that gold stocks would continue to perform; however, it's noteworthy that semiconductors were strong last week. Similarly, tech in general maintained its leadership last week with XLK and QQQ in the top 5 spots.
Tech maintaining strength suggests the market is not rattled by the geopolitical events.
However, retail (XRT) got hit hard last week, and that is not bullish. This may be related to the sharp rise in oil prices.
Considering the worst performers last week…
It is noteworthy how muted the move in TLT was last week, given the intensity of the fighting between Israel. Historically, such intense fighting would push TLT’s much higher. This muted response suggests there is pressure on the long bond. This pressure could be from concerns discussed here in recent weeks – fears of the increasing Federal budget deficit, inflation, declining interest in US bonds by foreign investors, etc.
When the semiconductors are a leading sector, the market is unlikely to have a serious correction unless the semiconductors (SMH) are part of it, so let’s start there…
The horizontal resistance level at which SMH fell back makes sense. However, it’s still over its 10-day MA, which is slightly over $250, and there is support around $250 based on the horizontal line from the May consolidation and the trendline from the April low. The trend is up and strong until $250 is broken.
One early warning of weakness is highlighted by the red circle on the 10/50 Real Motion chart. The last Real Motion close (dot) is red which is a warning that if the price breaks its 10 or 50-day MA the weakness will continue. So a break below $250 could be more bearish than most traders expect.
The Retail Sector (XRT) was down much more than SMH in terms of percentage move (down 4%+ vs. up 1%+ in SMH), and down more days. SMH had not broken a prior day low for 9 days until Friday. XRT was down for four consecutive days.
The XRT has a bearish “close and continue” pattern through the 10-day MA and closed below the 200-day MA.
XRT weakness is much worse than SMH, and it looks like it will take some time to recover from last week’s sell-off.
Is there a message or theme in the answers above?
On Friday, every index and sector was down except energy (XLE) and Gold Miners (GDX). This is not surprising, considering the start of intense fighting between Israel and Iran.
The real question is, will the declines continue?
On the bearish side, Friday’s pullback was not very big (just over 1%), but it did cause the indices to break their 10-day average. The close under the average starts a breakdown pattern, which will be significant if it is confirmed. Additionally, two indexes (IWM and DIA) have rolled over at and closed under their 200-day average.
On the bullish side, the groups that have led the market for the last 3 months held up well on Friday and for the week, with the exception of retail (XRT).
The large bearish response by XRT makes sense as a reaction to consumers’ sensitivity to the higher oil prices. Higher oil prices are quick to hit the consumers’ pocketbook, and many corporate expenses, so certain companies may see near-term headwinds.
However, the market has been desensitized to geopolitical events, leading to oil prices staying higher for long enough to cause a recession. As a result, it’s harder to get tech leadership to roll over as a result of geopolitical events or a spike in oil prices that could be seen as temporary.
In a broader summary of the sector movements, the sectors hit the hardest can be associated with “immediate” consumer demand (i.e. XRT, KRE) and higher oil prices leading to higher costs (i.e. Transportation, IYT). Meanwhile, the leading technology related trends are still intact.
Last week's low is an important support level for the markets. Until that breaks, along with more sectors breaking key support, the pullback isn't very threatening to the longer-term trend.
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| Every week we review the big picture of the market's technical condition as seen through the lens of our Big View data charts.
The bullets provide a quick summary organized by conditions we see as being risk-on, risk-off, or neutral. The video analysis dives deeper. |
Summary: Market sentiment remains cautiously risk-on but weakening, as bullish trends in foreign equities and semiconductors are offset by deteriorating breadth, weakening volume patterns, and a rise in volatility and safe-haven assets like gold and bonds. While seasonality remains favorable, short-term headwinds and mixed sector performance suggest a pivotal week ahead.
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