The Tel Aviv Stock Exchange’s flagship TA-35 index capped off a bullish week with a 2.92% total gain, reinforcing the local market’s alignment with positive global equities momentum. Despite a 0.49% decline during Friday’s closing session to settle at 4,170.22, the index remains poised near its 52-week peak of 4,219.63, signaling strong underlying demand even as traders booked profits ahead of the weekend. The shift to the Monday-Friday trading schedule continues to offer deeper correlation with European and US market flows, though Friday’s lower volume suggests a cautious pause before the next leg up.

Testing New Heights

The dominant narrative this week was the index’s aggressive test of the 4,220 resistance level. After opening the week near 4,050, buyers stepped in aggressively, driven by a blend of stabilizing currency headwinds and renewed interest in Israeli technology and cyclical stocks. The mid-week surge saw the TA-35 briefly kiss the 4,219.63 mark—a fresh 52-week high—before technical resistance prompted a consolidation. This price action confirms a bullish “breakout” structure, where previous resistance levels are now being tested as support. The ability to hold above 4,150 (the day’s low) is a constructive signal for bulls looking for continuation into next week.

Sector Rotation: Tech Shines, Banks Retreat

Friday’s session highlighted a clear divergence in sector performance, a classic sign of market rotation rather than broad-based weakness. While the broader index dipped, key technology constituents provided ballast. Tower Semiconductor (TSEM) surged 2.79%, and Teva Pharmaceutical (TEVA) added 0.67%, reflecting a defensive pivot by investors into dual-listed giants with global revenue streams.

Conversely, the heavy-weight banking sector, which had fueled much of the early-week rally, faced a wave of profit-taking. Bank Leumi (LUMI) dropped 1.66% and Bank Hapoalim (POLI) fell 1.60%, dragging the index down from its intraday highs. This pullback in financials is viewed by analysts as a healthy digestion of recent gains rather than a structural deterioration, especially given the sector’s year-to-date outperformance.

Liquidity and Volatility

Trading volume on Friday tapered off to approximately 27.1 million, slightly below the average volume of 33.9 million. This liquidity dip is characteristic of the “Friday effect” under the new trading week structure, exacerbated by the looming Presidents’ Day holiday in the United States, which often dampens participation from foreign institutional investors. The Day’s Range of roughly 31 points (4,151–4,182) indicates tightening volatility compared to the explosive moves seen earlier in the week. This volatility compression often precedes a significant move, suggesting that the market is coiling for either a breakout above 4,220 or a retest of the 4,100 support zone.

Outlook:
Looking ahead, investors should monitor the 4,150 support level closely; holding this line is crucial to keeping the immediate bullish trend intact. A confirmed breakout above 4,220 could open the door for a run toward the psychological 4,300 barrier. However, with US markets closed on Monday for the holiday, local catalysts will likely drive early week trading. Watch for any domestic economic data releases that could impact the shekel, as currency volatility remains a key risk factor for the index’s dual-listed components.