Here's Where Things Stood Between the U.S. and Iran as Market Closed Tuesday

Why Tuesday Was a Strange Day on Wall Street

Despite President Trump's looming deadline for massive bombing of Iran, the market held up fairly well for the second day in a row.

Pakistan's Prime Minister Shehbaz Sharif called for a two-week ceasefire as a goodwill gesture, part of a broader deal that would reopen the Strait of Hormuz immediately, with 15 to 20 days to finalize a broader settlement.

Trump called the proposal "significant" but "not good enough," adding that negotiations are advancing. Iran, for its part, stated it will not reopen the Strait as part of any temporary ceasefire.

The talk of a deal helped to boost the market into the close despite no indication that either side was ready to make a final compromise.

After dipping sharply in the morning, the S&P 500 and the Nasdaq 100 finished the day almost exactly flat, small caps had small gains, and the Roundhill Magnificent Seven ETF (MAGS) lagged once again. Breadth was poor, with just 42% of stocks in positive territory.

Remarkable Resilience

That is remarkable resilience given the potential for dramatic escalation if Trump follows through on Tuesday night. Investors are looking for another TACO move because it is clear that destroying Iran's infrastructure may push them to concede, but it will come at a heavy price, especially for oil and energy markets.

A two-week delay will provide some temporary relief, but the likelihood of setbacks will be high. Even if a deal is struck, the market appears to be ignoring much of the economic damage already done.

My Game Plan

This is an extremely difficult market to navigate. The risk of being caught on the wrong side of the news or in a wave of elevated volatility is high. My game plan is to continue waiting for confirmation that a trend change is underway.

Most market strategists focus on predicting when the absolute bottom has occurred. I'm not interested in making that prediction. What I want to see is clear upside momentum with a good chance of being sustained. When that occurs, I'll be able to buy aggressively and ride the trend. That is how you rack up sizable gains.

I don't know when that will happen, but I know it will eventually. I see no choice but to stay patient with significant cash on hand.

The news tonight will cause a big move in the market on Wednesday morning. I'll be watching for short-term trading opportunities.

Have a good evening. I'll see you tomorrow.

At the time of publication, DePorre had no positions in any securities mentioned.