Trump Posts Iran About-Face Just After Closing Bell

The market saw its worst action in 15 sessions on Tuesday as uncertainty about negotiations with Iran triggered selling pressure.

Shortly before the close, Vice President Vance cancelled his plans to attend negotiations in Islamabad as the Iranians struggled with internal disagreement about what to do next. However, a few minutes after the closing bell, President Trump issued the following statement:

"Based on the fact that the Government of Iran is seriously fractured, not unexpectedly so and, upon the request of Field Marshal Asim Munir, and Prime Minister Shehbaz Sharif, of Pakistan, we have been asked to hold our Attack on the Country of Iran until such time as their leaders and representatives can come up with a unified proposal. I have therefore directed our Military to continue the Blockade and, in all other respects, remain ready and able, and will therefore extend the Ceasefire until such time as their proposal is submitted, and discussions are concluded, one way or the other."

Stocks rebounded on that news but remained lower. This removes the immediate concern about military action but there is still plenty of uncertainty about what happens next.

Broad Pullback

Overall, the selling during regular trading wasn't too severe, with the S&P 500 losing 0.8%, but the Russell 2000 lagged, down 1.2%, and the selling was broad, with only about 30% of stocks in positive territory.

In view of the overbought conditions it didn't take much to trigger some downside action and the bullish spin is that some downside is needed to shake out speculative excess and to allow charts to form healthy patterns.

How Deep Does it Go?

The big question is how deep does this go. At this point a few down days to test major support at the 50-day simple moving average is healthy. Stocks would have to drop substantially before key support levels even come into play. There are plenty of dip buyers out there licking their chops at buying the stocks that they missed at lower prices.

News Flow Wildcard

The wildcard is the news flow. The market sold off in March due to the uncertainty of the situation and then rallied for weeks in anticipation that the situation would be resolved. We have renewed uncertainty now but with tensions increasing, there is likely to be some resolution soon. The primary issue is whether military action can be avoided and how painful it will be.

Staying With the Game Plan

My game plan remains the same. I'm staying focused on individual stock picking and made a few buys on weakness today. Although I took a few hits, my stocks are still in good shape technically and I'm not concerned yet about a major reversal.

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

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