Now we know why we learned World History in high school.
After a decent start, the market is pulling back on fears of a possible US conflict with Iran. Tensions have been rising for a few weeks over Iran’s threat to shut down the Strait of Hormuz which happens to run 15 million barrels a day of oil through its waters, or one-fifth of the global production.
The country has been moved to the top of the global sanctions list due to its thirst for nuclear weapons and said shutting down the Strait would be easier than drinking a glass of H20. The US fired back (possible future pun intended) by saying no way Jose and will take action if Iran attempts to block the 4-mile width passage.
The US has been trying to, ah what’s a good word, “conform” Iran for decades and this threat of war shouldn’t be taken lightly. We aren’t worried about the outcome of who would “win” a war because it is never a good thing but the fight would be swift and Iran would suffer terribly. We are more worried about Iran’s hunger to build a nuclear weapon and the fact that oil could double to $200 if shots are fired.
Let’s hope it doesn’t come to battle and cooler heads prevail but this could get ugly.
As far as the impact on the market, the bears are pushing support after the bulls ran the indexes higher at the open. However, once the US/ Iran news started making the rounds on the business channels, stocks pulled back. War doesn’t necessarily mean the market will automatically go lower and there our other countries who share our same interest in keeping the Strait open.
As we head to press, the market is near its lows. The Dow is down 133 points to 12,157 while the S&P 500 is off by 14 points to 1,250. Both indexes have slipped below their 200-day moving averages. The Nasdaq is showing a decline of 30 points to 2,595.
We have some more profits to take in case the pullback gets worse but we are looking for support to hold. Subscribers, check the Members Area for the updates.