In the past the S&P typically drops on the threat and the...

In the past the S&P typically drops on the threat and the outbreak of war and typically has a good run up during and following. For my 2 cents the way the US Fed handles the threat of inflation will have a much bigger impact on the markets over the next year. It's interesting that since the general market highs of January there appears to have been a rotation out of many sectors and in to "safer" assets and cash sitting on the sidelines, as illustrated by indicators like the below from The US National Association of Active Investment Managers (NAAIM). This shows that the average exposure to US equity markets by NAAIM members is at close to the lowest it has been since the covid lows. The implication here is that once the market decides it safe to get back in the water, there is a lot of fuel waiting to drive prices up. Anyway, just a bit of TA that is not candles!

Lucky my innocent little LTR chart (below this) does not understand war or inflation, only what impact these and many other factors have on price and volume...



I like momentum divergence as an early indication that there's a change in the wind, but it's been a while since we've had one. I noticed a potential bullish divergence forming on Tuesday and today it confirmed. Price hit a lower low yesterday but my main momentum indicator (black oscillator) formed a higher low, and so did its stochastic (blue squiggle). The S&P, Nasdaq and Russell also clocked bullish divergences, as did Tesla and the LIT ETF. There's different types and strength of divergence and this one is "shallow" compared to a stronger "deep" divergence but a bullish divergence nonetheless.

Now will it follow through? If price manages to get above the $1.425 level and head up but fail to close above the $1.675 level on this run, then from what I can see a bearish hidden divergence will register quick-smart which would then suggest price is headed sideways for a while or back down. Lot's more going on in the chart but I thought I'd highlight this aspect because momentum divergence is a pretty powerful indicator.