Free After-Hours Analysis:
It’s been a dramatic 24 hours for the S&P 500. Iran launched rockets at two U.S. airbases on Tuesday evening, sending futures tumbling nearly 2%. Between the headlines and the futures market’s reaction, it was easy to be concerned for our equity positions on Wednesday. Yet barely 12 hours later, futures recovered those towering losses before the open and the index opened in the green. And it got even better, prices actually rallied to record highs later that afternoon!
While this performance was definitely awe-inspiring and a bit shocking, this resilience shouldn’t have surprised anyone. This was the fourth session in a row affected by headlines from the Middle East. It started Friday, then Monday, and again on Tuesday. What did all three of those sessions have in common? Owners largely shrugged and continued holding for higher prices. Would a fourth day of headlines change anything? Probably not. And that is exactly what happened today. Owners shrugged, supply dried up, and prices rallied back to the highs.
Agree with the market or don’t, but there is no arguing with it. If this market doesn’t want to go down, there is only one way to trade it. Anyone who overreacted to these developments is dumbfounded by the market’s blatant disregard for headlines that “obviously” should have sent stocks crashing. But while those people are busy arguing with the market, others of us are over here making money. I see a market that refuses to go down on bad news and from experience, there are few things more bullish than a market that refuses to go down.
I have no idea how much longer this strength can last, but as long as it keeps doing all the right things, I’m going to stick with it.