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Technical Market Indicators
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March 30, 2026
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Fear and Loathing in the Middle East
Executive Highlights
• Geopolitical
Impact: Escalating Middle East tensions have triggered four weeks of intense
short-term volatility. While equity indexes remain in clear downtrends, extreme
bearish sentiment suggests a potential "contrarian buy" setup if
hostilities resolve. • Breadth
& Momentum: Market internals have weakened significantly this month. Only
16% of 38 tracked markets trade above their 50-day SMAs, though long-term
"bullish configurations" (50/200-day SMA ratios) remain largely
intact at 82%. • Sector
Leadership: Energy remains the sole pillar of strength. XLE reached record
highs, fueled by WTI Crude Oil posting its highest weekly close since May 2022. • Fixed Income
& Currencies: Bonds have broken below 50- and 200-day SMAs as rising oil
prices reignite inflation fears. The U.S. Dollar (UUP) continues to act as a
primary safe haven. Sentiment Indicators Market sentiment has deteriorated to levels consistent with
prior contrarian buy signals. The VIX Index rose to 31.65 on March 27, more
than two standard deviations above its 10-year mean of 18.79. The AAII
Bulls/Bears survey recorded 32% bullish versus 50% bearish, reflecting
sustained pessimism. The CNN Investor Sentiment Index declined from 66 on
January 28 to 10, placing it deeper into the Extreme Fear zone—a historically
bullish condition. Momentum and Breadth Long-term momentum remains positive; however, downside
momentum has strengthened across short- and intermediate-term time frames. Of
38 major tracked markets: • Only 16% are
above their 50-day Simple Moving Averages (SMAs). • 49% are
above their 200-day SMAs. • 82% maintain
a bullish long-term configuration (50-day SMA above 200-day SMA). Within the S&P 500, only 20.4% of stocks trade above
their 50-day SMAs, and 44.0% above their 200-day SMAs. The cumulative Advance–Decline Line (A/D Line) finished last
week nearly unchanged and remains relatively resilient. The A/D Line remains
below its 50-day SMA but above its 200-day SMA, and the 50 is above the 200,
thereby preserving a bullish long-term relationship. Net New Highs improved marginally to –142 from –162 the
prior week, indicating limited deterioration relative to the April 2025 trough
of –1,161. However, readings below zero continue to denote a bearish breadth
profile. Sector and Market Rotation International equities underperformed in both relative and
absolute terms. The Emerging Markets ETF (EEM) remains above its 200-day SMA
but fell below both the 50- and 100-day SMAs. The EAFE ETF (EFA) declined below
all three SMAs and has underperformed EEM for over two years. Both short-term
trends remain negative. The China Large-Cap ETF (FXI) declined to its lowest level
since May 2025, confirming a "death cross" on March 11, 2026, when
the 50-day SMA crossed below the 200-day SMA. Technical conditions indicate
continued weakness; exposure should be avoided. Currencies and Commodities Precious and industrial metals were relatively stable but
remain technically vulnerable. Gold Miners (GDX), Silver (SLV), Copper (CPER),
and Gold (GLD) all remain above their 200-day SMAs yet below their shorter-term
averages, suggesting potential for additional downside. Hedging exposure is
advisable. Energy markets remain in confirmed uptrends. WTI Crude Oil
(CLK26, 99.64) closed at its highest level since May 2022, while the Oil ETF
(USO) reached a multi-year high dating back to October 2018. Price action
remains bullish but sensitive to any cessation of hostilities. Fixed Income
The Energy sector remains the
sole area of strength. The S&P 500 Energy Sector SPDR (XLE, 62.56) reached
a record high as WTI Crude Oil May ’26 futures (CLK26, 99.64) posted their
highest weekly close since May 2022. Energy leadership has persisted since the
onset of conflict four weeks ago.
The U.S. Dollar Index ETF (UUP,
27.84) rebounded following a brief six-day pullback, maintaining its position
above major SMAs. Elevated volatility is likely to persist amid geopolitical
uncertainty.
U.S. fixed income continued to weaken as
rising oil prices pressured inflation expectations. The Long Bond ETF (TLT),
U.S. Note ETF (IEF), Aggregate Bond (AGG), High-Yield Corporate (HYG), and TIPS
(TIP) all broke below their 50-day and 200-day SMAs. The technical structure
remains short-term bearish, with outcomes heavily contingent on geopolitical
developments and their subsequent impact on inflation.
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11-Year Outperformance by the
Top 10 Exchange Traded Funds
Weekly Rankings of Major Trend Relative Strength
My weekly Top 10 ETFs ranked by the Major Trend Relative Strength outperformed the S&P 500 by over an 11-year period of real-time weekly tests. Click here for a graph of simulated performance.
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Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.
According to CFTC Rule 4.41, hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
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Robert W. Colby, CMT,
is a consultant to institutional and private investors and traders, providing regular analytical reports, custom research services, and trading systems tailored to clients' objectives. Clients include the most successful traders and investors in the world. Robert is the author of The Encyclopedia of Technical Market Indicators, which is the standard reference for indicator and trading systems design. Previously, at several large Wall Street firms, Robert worked as a proprietary trader, technical analyst, and fundamental analyst. He also was adjunct professor at New York University and New York Institute of Finance, where he developed new courses on technical analysis and market timing.
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