Key insights
- The author posits that large investors anticipated a ceasefire in the Middle East and bought equities last week, before the official announcement. They cite market resilience despite negative geopolitical events and rising oil prices as evidence. The theory suggests potential insider knowledge or superior market intelligence among large investors. The implication is a short-term bearish signal, as the 'good news' may already be priced in, leaving the market vulnerable to negative surprises.
Over the past month or so, every time negative news came out such as the Houthis firing missiles toward Israel, markets fell, while they rose on positive news. However, right after that since the beginning of April, they bounced on "old news" about diplomacy and negotiations.
If that is not strange to you, say it was still considered a positive development despite being a rehash of previous information, events and rhetorics since then have worsened. Universities were bombed, Trump threatened to destroy an entire civilization, Iran cut off direct communications & threatened to retaliate beyond the region, certain countries almost ran out of oil (although OPEC countries plan to up their production).
Chart of oil futures, ex-US, and S&P for the past months
Yet markets kept recovering despite many Redditors saying the worst had NOT been priced in. As we have just found out, a ceasefire has been announced and the Hormuz is to re-open for two weeks under Iranian "coordination".
My theory right now is that large investors somehow knew (maybe they are smarter, more experienced, or have insider knowledge) to start buying back last week.
Important: My posts have been removed twice. The first time the mods cited "low effort". The second time they claimed my post was too basic or applied directly to me only. I am posting again not to flaunt the mods but because my posts gathered votes and comments quickly before being removed, and I genuinely believe that the mods' reasons are off the mark.
So please also comment whether you think this post may or may not be "low effort" "too basic" or applicable to no one other than myself. For reference, my previous posts were similar to this one.
Edit: at least partially priced in; I don't mean 100% of all future price movements this week lol.