NEW YORK ( TheStreet) -- U.S. investors are bracing for a market turndown this week as the relative strength of both gold and high cap stocks outperform equity indexes.
The Crimean referendum to join Russia was overwhelmingly approved in Moscow's favor Sunday, signaling tensions between NATO countries and Russia will escalate the next few days.
Around 95.5% of those polled had chosen the option of annexation by Moscow, a move that has been reported as unconstitutional by the White House.
Increased tension in the region does not indicate war is the next viable option, but negative headlines over the next week could hurt investor sentiment in iShares MSCI Emerging Markets (EEM), which could drag down developed markets as well.
Meanwhile, the Federal Reserve meeting this week could increase market volatility, even though the expected outcome of a $10 billion stimulus cut does not look to be in jeopardy.
A string of weak data the past few months has led investors to question whether the Fed would consider lessening its bond cuts, but based on commentary by policymakers, it looks like the bar is set pretty high for negative events to derail current policy.
The news this week looks to be biased towards negativity which could lead to continued selling pressure from the end of last week.
Analyzing the strengths and weaknesses of certain markets allows the investor to get a feel of whether the overall sentiment is confident or anxious.
The two indicators that will be used are a comparison of SPDR Gold Shares (GLD) over SPDR S&P 500 (SPY), and iShares Select Dividend (DVY) over SPDR S&P 500. When the majority of investors are confident in equities SPDR S&P 500 should outperform and both indicators should be moving lower.