RealMoney

Is it good for stocks? Is it bad for stocks? Does it matter for stocks? Let's sell. No, let's buy.

There, that's pretty much the litany after the President Trump took an action that we all knew he was going to do, repudiate the deal that ended sanctions on Iran and slap them right back on.

What's amazing to me is the sheer incoherence of it all.

So let' me break down the action so you can put it in some sort of context that makes sense.

First, there's the obvious. Today was the day when buyers flocked back to the defense stocks. Why not? Anything that antagonizes Iran makes the Middle East a more volatile neighborhood. That's very good news for the defense stocks.

But here's what is crazy about the defense move and is a great reminder about how this particular market works.

The defense stocks had been flying for most of the year because of North Korean and South Korean tensions and secondarily tensions in the Middle East.

Then amazingly, the group was hit by a one two punch that just shocked people: first President Trump pushed for some sort of agreement between the North and the South and he actually looks like he actually might be getting something done.

From that particular judgment the defense stocks started rolling over. Then Lockheed Martin (LMT) , long acknowledged to be the big capitalization leader of the group, gave you a downbeat cash flow forecast. General Dynamics (GD) then followed up with some weak business jet orders. Then Raytheon (RTN) , the big missile makers, sold off when its upside surprised turned out to be a downside surprise. The stock nosedived from the $220s to below $200.

And then the roof came down on the group.

Now, this market has absolutely no memory whatsoever. In the last few days with a supposition that President Trump would reject the Iranian accords, the money started flowing right back in.

The leaders? Northrop Grumman (NOC) and Harris Corp (HRS) which were pushed hard by Goldman Sachs today. But right behind them? The stocks of General Dynamics, Raytheon and Lockheed Martin. Let this be a reminder that defense stocks trade up on fear of war and they go down on earnings and we already had earnings so we could trade totally on war fears,.

I know, I know, it seems so obvious. And that's because it is obvious as long as you remember how stocks move. Why did the defense stocks get so high anyway? Because of war tensions. When they failed to deliver on heightened expectations and on a potential Korean conflict, they get thrown out. But that was a full ten days ago and nobody can even remember why they were down.

Speaking of obvious, the oil stocks had been going down on a belief that everyone knew oil was done going up given that it was no secret that the president didn't like the deal. He'd been talking about it the whole campaign. Smart money figured that the news was in the stocks and we saw selling all day.

At the same time, buyers flooded into the airlines, finally betting that oil had crested and it was safe to come out of their bunkers and start buying. We saw furious buying in United Continental (UAL) . American (AAL) and Delta (DAL) by so-called smart money that had been waiting for oil to rollover.

Didn't it have to? Wasn't it a given that oil was done now that the event it had run into had occurred.

Not so fast. Not in this stupid market. Then, like with the defense stocks that had been thrown away buyers came in and bought everything energy. Again, it's almost too good to be true: we get an event that inflames the Middle East and oil goes higher EVEN as you had to be living under a rock to think that Trump was going to do anything else.

Like the defense stocks, where if you did a lot of work and had a good memory you would have sold and not bought, you got the same deal with the oils. They just roared. Again, the market defied what markets are supposed to do. You are not supposed to make money in such an obvious way.

Then there are the people I call the "pause" buyers. These folks are in there all day buying certain stocks and they walk away for a few minutes to be sure that the president doesn't pull off some surprise and then they end the pause and come back with vengeance.

We saw that today in three of the cloud kings, Adobe (ADBE) , which is the king of the commerce cloud, Salesforce (CRM) , the kind of customer relations management and Workday (WDAY) , the king of human resources and finance.

Now what's always intriguing about moves like this is they are totally unjustified. These buyers just keep pulling the trigger over and over as if there's something going on. But there isn't. They just can't control themselves.

We had gigantic buyers in the banks, spurred on by totally idiotic buying in Citigroup (C) because a fund called ValueAct took a small position in the company's stock and said it was undervalued. The stock soared simply on that news, again, something that's kind of nutty. Don't get me wrong. My charitable trust has a position in Citigroup. But if anyone actually thinks that ValueAct is going to force change here, well that's downright silly. Oddly that spurred a ton of buying in a bunch of banks as if, eureka, the group's so cheap it must be bought.

Of course, at the end of the day buyers who had been waiting for whatever the president would do sensed that that was it for the Iran issue and came back and started buying pretty much anything.

Which brings me to a point I want to make. This market simply isn't that smart. Yesterday, for example, the market soared at the opening because Warren Buffett said things were terrific. That unleashed the floodgates of buying and the buying stayed strong until the president tweeted that he was going to make an announcement about Iran.

The market then cascaded down and once again everyone who bought that up opening just got obliterated. It's become almost a ritual. Up opening, buy, get killed, give up.

We can't outlaw up openings. We can't sticker them and tell you that you will get hurt if you buy them. I would say, though, in this market you can absolutely never count on people to do the right thing.

That, and the total lack of memory about what brought a stock down to begin with, or a ridiculous belief in what's driving up a stock, are the hallmarks of this moment. That's why this market has become so hard. Oil should be down not up. The defense stocks should have run into the event, not the opposite.

The reason why this market has become so hard is that it doesn't seem to know how to calculate an event. It doesn't know how to discount news. It doesn't know how to game the president. It doesn't have a clue of what's right to do or has been right in the past or what's wrong. I know it's ridiculous but in all my years of investing and trading I don't think I have ever seen buyers and sellers be faked out so often.

Here's my bottom line: this is a market made for people who have conviction. If you don't you will be shaken out time and time again. Find a stock you want, wait for the sell off. And then buy. Otherwise, just stay away.