Key insights
- The author argues that the cancellation of an Iran attack, while causing a temporary market spike, does not alter the fundamental reasons for the ongoing equity sell-off. The market was already declining due to factors unrelated to war escalation. The author suggests the recent rally on the cancellation news is a 'non-event' being bought, with no confirmation of a deal, and that underlying bearish drivers remain in place.
I'm seeing euphoric posts abound as we got a spike on that reversal of decision, but I think people forgot we were in a sell off prior to this and those reasons didn't change because of this. Everything is exactly as it was. It just didn't get worse. We rose to new highs with no clear end on war escalations in sight so there was no fear in the market for these possibilities. We began selling off for various other reasons, but war escalation wasn't one.
Today, the market barely reacted to his original truth post this morning and mostly went sideways and then, on the cancellation, we run up. Those sells didn't come from anything escalation related yet the non-event was bought. There is no confirmation that any deal has been accepted so far and we've been down this road before, so even that prospect is currently questionable.
Thoughts?