Defence Sector Shares Advance

Recent developments, including the operation in Venezuela and unrest in Iran, are driving gains in defence sector equities. This week in particular:

→ The US President proposed increasing the military budget from USD 901 billion in 2026 to USD 1.5 trillion in 2027, providing a strong outlook for revenue growth across defence contractors and the military-industrial complex.

→ White House Press Secretary Karoline Leavitt stated that the US President and his team are discussing a range of options regarding Greenland, noting that the use of US armed forces always remains an option available to the Commander-in-Chief.

A clear example of the market’s reaction is the sharp rally in Lockheed Martin (LMT) shares. While trading at the start of the year opened near USD 483.50, the price exceeded USD 540 at the peak of yesterday’s session.

Technical Analysis of the LMT Chart

Since the low recorded on 22 July, price fluctuations have been forming an ascending channel. At that point, the market had fallen to a near two-year low, which “smart money” appears to have viewed as an attractive opportunity, as confirmed by an abnormal surge in trading volume.

Recent price action suggests that the upper boundary of the channel is acting as resistance, as evidenced by the long upper wicks on candlesticks over the past few sessions.

Traders may therefore assume that the market is overbought, a view supported by RSI readings, and that the emotionally driven bullish reaction could fade, allowing the upper boundary of the channel to reverse price lower, as was the case in October 2025.

In the event of a correction, potential support levels include:
→ the channel median, which acted as resistance in December 2025;
→ the USD 483.50 level, which has repeatedly interacted with price in the past (indicated by arrows).

Overall, shares of LMT and other companies within the sector appear extremely volatile. Price swings may be driven both by hawkish rhetoric from officials and by other unexpected developments. In the near term, markets are also awaiting a US Supreme Court decision on the legality of tariffs introduced by Trump in international trade.

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