Much to the consternation of stock market bears, the Iran situation has turned out to be yet another market positive. The Trump administration has managed to take out the world's leading terrorist with no loss of other lives or negative repercussions. The whole Iran issue was resolved in a matter of days following an attack on the U.S. embassy in Iraq.
Many market bulls were hopeful that the Iran issue would be a good excuse for some much needed consolidation of the indices. The indices, as well as many individual stocks, were overbought after a big run to end the year and a pullback or consolidation at this point would be a great setup going into earnings season.
Of course, anything that simple or easy usual doesn't work well in the stock market. What was particularly interesting was that the 'bad' Iran news was used as an excuse for aggressive buying when the market gapped lower on Friday and Tuesday. Market players simply refused to acknowledge that the issue was a bad one for the market.
So here we are again with the S&P 500 technically extended and hitting new all time highs. It is now a perfect setup for a 'sell the news' reaction to earnings reports. If there is some consolidation in the next week or two that will help the situation, this is still a market in need of a good excuse for some corrective action if it going to continue to trend higher in a healthy way.
At its core, this market is obviously being driven been the Fed's Not-QE program and the fact that market players never seem to run out of buying power. Corporate buybacks are in a quiet period but there is still a flood of capital looking for a place to go and there are no alternatives.
The easiest mistake in this market is to keep looking for headlines to justify a selloff. Many of the bears harbor a deep dislike of President Trump and it causing them to look at this market in the wrong way.
While there are many stocks that are extended here I see no choice but to continue to look for new buys. Trying to anticipate a market top is a miserable approach to dealing with this market.