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US futures are keeping just a little higher today but is it all some misplaced optimism? US president Trump has signaled for ally countries to come and help alleviate tensions in the Strait of Hormuz. However, will that really work? I outlined earlier why his call to arms will fall on deaf ears and why even if not, it will not help much with the situation in any case.For now at least, US futures are hanging on to some hope that we might see a resolution soon enough. But with Iran continuing to cause chaos across the region, even striking UAE’s Fujairah oil port again, it’s hard to see a meaningful de-escalation in tensions.S&P 500 futures are up 0.3% while Nasdaq futures are up 0.5% on the day. In part, I want to argue that the slight bounce here owes much to a technical one rather than investors seeing scope for optimism to the US-Iran conflict. That as we are meeting some key levels on the charts. Let’s take a look below.Of note, we are seeing the S&P 500 start to close in on its 200-day moving average (blue line). Meanwhile, the Nasdaq itself is already testing the key level on Friday but arguably not securing a firm break just yet. That as the November lows near 22,000 is still very much in play as well currently.As such, tech shares have a momentous week up ahead in trying to find support from the key levels above. For some context, the last time we saw US indices broke below both the key daily moving averages was back in March to May last year.That indicates the kind of upside momentum that we have come to associate US stocks, or more specifically tech shares, with in the past year or so.So if there is to be a material shift in the technical momentum, that could lead to a major corrective call in price action in the short-term. And one can argue amid the whole AI rally that perhaps we are overdue one. It’s sort of the volatile trigger selling in gold and silver that we saw towards the end of January. Yup, that sort of thing.Taking that into consideration, the charts look to be what may point to the next momentum shift in US stocks – more so than what the US-Iran conflict might be telling. However, there is no doubt that tensions in the Middle East and oil prices are also key factors in driving sentiment at this stage. So, it’s all connected and part of the playbook as we get into the new week.Besides that, just be wary that this will also be a big week as the central bank bonanza returns. And that will kick off with the RBA tomorrow.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
US futures are slightly up, but here’s the catch: geopolitical tensions in the Strait of Hormuz could flip the script. Trump’s call for allies to step in might seem like a stabilizing move, but history shows that such interventions often lead to more uncertainty. Traders should keep an eye on oil prices, as any escalation in the region could spike volatility. If tensions rise, we could see a significant impact on energy stocks and commodities, especially if crude oil breaks above key resistance levels. Watch for any shifts in sentiment that could push futures lower, particularly if the market reacts negatively to news from the region. The real story is whether this optimism is sustainable or just a temporary blip before reality sets in.
📮 Takeaway
Monitor oil prices closely; any escalation in the Strait of Hormuz could trigger volatility in US futures and energy markets.
