So Far, So Good in The Strait

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I’ve written well over two thousand posts over the last sixteen years, and this will be the first that doesn’t include any charts that I drew myself. That feels a bit strange but I’m writing this post to draw everyone’s attention to what is really important about this Iran War.

The war itself is largely irrelevant. Whether the US, Israel or Iran are bombing, or blockading, or blustering doesn’t really matter. All that is really important on the bigger picture are the Strait of Hormuz and, to a slightly lesser extent, the Bab al-Mandab Strait, the two key chokepoints for world trade routes in the Middle East:

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Laissez les Bons Temps Rouler

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Yesterday evening, the market had a micro-crash based on rumors that Iran was getting bombed (of all places!) Those rumors were quickly dismissed, and the market had a shaky recovery all night long.

As of half an hour before the opening bell, equities are bruised but no longer battered. When the Bible speaks of wars and rumors of wars, this is probably the chart it has in mind.

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What If This is Wave Two?

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I’ve traded long enough to have an opinion on Elliott Wave (at least the kind proffered by our friends in Gainesville). It’s misleading/worthless/harmful in bull markets and nearly invaluable in bear markets.

The question is: what kind of market is this? Yes, yes, we’re at lifetime highs every day, so you’d think I could figure it out. All the same, what EW proposes is that we are at the top of Wave 2, at least as it concerns the Dow.

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