Trump-Driven Market Confusion Illuminates Bleak Path Ahead

US-ECONOMY-MARKET-STOCKS

Monday's market action was dominated by fast-shifting news flow that illustrated just how complicated the path forward is going to be.

Early in the session, it looked like another grim day as investors waited for the threatened bombing of Iranian infrastructure after President Trump's 48-hour deadline expired. Trump surprised the market with an announcement that he was delaying the response for five days due to progress in negotiations. That news sent stocks sharply higher.

Then, Iranian media issued several reports stating that there were no talks and that no deal was coming. Trump continued to describe progress. Other reports emerged that Pakistan may host talks between Iran and the U.S. in the near future. Confusing is an understatement.

The most likely explanation is that all of this news flow is partially true. Iran is starting to splinter. The Islamic Revolutionary Guard Corps (IRGC) remains in control and is hardline and ideological. They have strong incentives to continue the war out of self-preservation. There is also a more moderate executive branch in Iran that is probably more inclined to reach a deal that produces regime change, but it is in a precarious position relative to the IRGC. The chaos and conflicting interests inside Iran are intensifying, and that makes reliable information difficult to come by and clean outcomes difficult to predict.

As this drama unfolded, the market lost some momentum but held the bulk of its gains. The close was solid with about 75% of stocks in positive territory. The Russell 2000 (IWM) led with a gain of 2.2% and the Magnificent Seven (MAGS) added 1.6%. Oil finished the day down roughly 9% and interest rates softened as well.

What This Means

This is a positive development but it is just one step, not a resolution. Most charts are still in poor shape, and there is no reason to believe we are on the verge of a lasting uptrend. The more likely path forward is continued choppy action, which is not necessarily a negative. Choppiness helps better technical setups form and gives the market time to build the kind of support that lasting moves are established on.

I did considerable work looking for new buys today but found very little that felt ready for capital. This is the first day of a rally attempt. IBD requires follow-through confirmation in a few sessions before that attempt earns more confidence. We will see how the next few days develop.

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

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