Market Holds It Together Ahead of a Weekend of Uncertainty

Hostilities between Israel and Iran escalated as the day progressed on Friday, and there are no indications that it will cool off soon. Oil jumped over 6.5% during the day, but the damage to the S&P 500 was fairly mild, with a pullback of around 1.2%. The DJIA and Russell 2000 lost a bit less than 2%, while breadth was more than five to one negative, with new 12-month lows at the same level as new 12-month highs.

The S&P 500 closed the regular session near the lows of the day because of the great uncertainty about what may unfold over the weekend. Market players were mostly calm, however, and there were few indications of panic selling.

The market has needed some corrective action, but the bears were looking for economic news to be the catalyst and not a full-blown war in the Middle East. The airstrikes obviously impacted oil, which is the primary economic fallout that could impact the U.S. There are likely to be supply chain issues also, although the economic impact is likely not to be significant, which is why the indexes held up fairly well.

While the news of war is tragic, it may actually be beneficial for the market as it shakes things up and will create more opportunities for investors. The market has been strong for a while, but there has been a dearth of good entry points as many stocks have been overbought for some time.

It is going to be a very tense weekend for millions of people in the Middle East, and we will be praying for a peaceful outcome.

Have a great weekend. I’ll see you on Monday. 

At the time of publication, Rev Shark had no positions in any securities mentioned.