However, this bullish trend is only on the surface, as geopolitical and macroeconomic uncertainties continue to pressure the market. Tensions between Israel and Iran recently pushed oil prices higher, though Brent crude has now stabilized around $74.60. RBC Capital has warned that if oil reaches $120 per barrel, the S&P 500 could face a correction of up to 20%. It's not just about oil—if inflation picks up again, the Federal Reserve may resume aggressive tightening, which would be a negative signal for equities.
Another important factor is the July 9 tariff deadline. The U.S. has announced plans to impose new tariffs on China, which could add to inflationary pressures. Due to this uncertainty, institutional investors have become more cautious, and earnings forecasts could be affected. That said, analysts are still projecting 5–7% earnings growth for Q3 and Q4, and around 9% for the full year. Citi has revised its 2025 year-end target for the S&P 500 to 6,300, up from current levels above 6,000, indicating that long-term optimism still exists.
On the technical side, indices like QQQ (tech-heavy) remain in a “Buy” zone. The MACD is strongly positive, and all major moving averages (20-, 50-, 100-, and 200-day) are in bullish territory. The RSI is neutral but not in overbought levels, which suggests that the risk of a correction remains limited for now. However, short-term EMA signals are starting to weaken, which could be an early sign of momentum reversal.
The most concerning signal comes from market breadth. According to ChartMill’s analysis on June 13, only 16% of stocks advanced while 82.5% declined on major exchanges. This divergence shows that while indexes are rising, most individual stocks are falling. This means the rally is being driven by a small group of mega-cap tech stocks. Participation on the 50-day moving average has dropped from 78.9% to 72%, and only about 41.5% of stocks are trading above their 200-day average. When these figures fall below 50%, it signals a weak foundation for the rally.
In summary, the market appears strong on the surface, but internal indicators are mixed. While the trend remains bullish, it is increasingly sensitive to external factors like oil prices, tariffs, and Federal Reserve policy. If any negative surprise occurs, the current rally could break. Momentum still lies with the tech sector, but unless broader participation increases, a short-term correction is quite possible.
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