Nobody Wants to Be on the Sidelines When the Iran 'War Is Over'

The market bounced back on Wednesday from the cancelled negotiations between Iran and the U.S. but the situation remains uncertain. Although Iran continues to publicly broadcast its opposition to any sort of deal, investors remain optimistic about a positive outcome. No one wants to be on the sidelines when we have the new "war is over" announcement.

Technical Picture Holds Up

Technical action remains quite good as the little squall of selling on Tuesday helped to alleviate some of the overbought conditions. There is still strong speculative interest out there and it is interesting to see some renewed interest on Wednesday in Bitcoin (IBIT) , which broke out to its highest level since February 3.

Narrow but Not Frothy

While the gains in the indices were fairly mild, the Magnificent Seven (MAGS) jumped 1.7% and the Nasdaq hit a new all-time high. Breadth was only about 50% positive and there were just a little over 200 stocks hitting new highs which is a function of narrow leadership.

There are some strong pockets of action with many 10%-plus movers, but the number of stocks making parabolic moves is quite small. It isn't as wildly frothy as some bears would have you believe.

The $1 Trillion Question

The pattern of the market for the last several weeks has been for stocks to keep running up in anticipation of good news even when that good news doesn't happen or is delayed. We are seeing that again, but the real test of this market will occur when there finally are some significant developments. The $1 trillion question is how much good news is already priced into this market which will be forced to turn its focus to the longer-term fallout of elevated oil prices and inflationary pressures.

The bulls believe that the market doesn't appreciate the level of economic growth that is being unleashed when Iran is eliminated as a threat and the AI boom continues. I'm rooting for that outcome but it is going to take some significant price action to be convincing.

The Game Plan

I continue to stay focused on managing individual stock positions. I cut back a few things that have performed well as they hit new highs but I'm looking hard to put more cash to work.

Tesla (TSLA) earnings are hitting and the stock is up about 4% on adjusted EPS of 41 cents, versus the consensus 36 cents and revenue of $22.39 billion, versus the consensus $22.35 billion figure. The conference call will be key.

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

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