By David Rogers. BLOWING ROCK, N.C. — This morning’s stock market euphoria may be short-lived if Iran’s understanding of the Trump-announced ceasefire turns out to be different than what has been ballyhooed by this President, who has a history of exaggeration and mostly unwarranted self-congratulation. We shall see — and reserve judgment, giving it time to play out and hoping for a lasting, peaceful resolution.
The stock market’s recent collapse was a combination of two things: [1] It had achieved “frothy” elevated valuations and was begging for an extended period of price correction after its 10-month advance with barely a hiccup from the April 2025 bottom, and [2] realistic assumptions by a broad swath of market players about what outright war in the Middle East meant for (higher) energy prices, particularly oil and gas and products derived from petrochemicals (i.e. plastics) — and the consequent cost to consumers, as well as manufacturers.
It is important to remember that market’s “correct” in some combination of two basic ways: [1] meaningful price decline or [2] sideways consolidation. Before the Trump war, I felt we were going through a sideways consolidation pattern, over time. Obviously, what had the potential to become a widening conflict in the Middle East, with Iran targeting U.S. and Israel allies as well as U.S. and Israeli military assets, the price correction became more adverse. Had the situation worsened, there was the looming potential for a market meltdown. For now, that seems to have been avoided with the Trump Administration being offered a way to at least save face and, at least in their minds, declare victory.
As expensive as this Trump venture vs. Iran was for U.S. taxpayers and consumers, we are also left to wonder about the rebuilding of Iran’s civilian infrastructure, where it was damaged or destroyed. After WWII, we helped rebuild Europe, including Germany, and Japan has even become our ally. After the Vietnam War, we helped reinvigorate that country’s economy. Extended olive branches padded with investments go a long way toward restoring relationships. If Trump is truly the self-described “President of Peace,” what will be the USA’s ongoing role in the Middle East?
With this morning’s remarkable, if expected resurgence with the hopeful end of hostilities, the Nasdaq (QQQ) has tagged the upper Bollinger band. Moreover, with the rally past the QQQ’s rising 200-day moving average, for all intents and purposes it has re-established the long-term bull market. But in order for it to remain intact, I think it is important that the Iran conflict stay resolved. Any more unhinged, profanity-laced rhetoric about destroying an entire civilization will likely result in a market setback as long as Trump is at the helm, steering the military ship.
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