Known Unknowns

One of the more interesting psychological aspect about last night's headlines regarding a White House-ordered U.S. airstrike killing top Iranian Military General, Qassem Soleimani, is how quickly many were to jump to conclusions about the fallout from this news. Instant predictions for World War III were quite popular, as were praise and harsh criticism of the White House order alike. 

Stock index futures dove overnight, while oil, gold, and Treasuries all enjoyed a safe haven spike. In addition, aerospace and defense firms are mostly catching a strong bid this morning, all of which is fairly standard in terms of an initial, knee-jerk reaction to this sort of news. 

The real issue for us as market players is whether last night's event ushers in, be it as a catalyst or merely an excuse, a new regime of choppy markets and heightened volatility compared to what we have seen in recent months. Thus far, it is way too early to make that declaration.

At a minimum, for example, one would think bears need to crack the QQQ back below $214 and hold price under yesterday's post-gap lows, as seen on the QQQ 15-minute chart, below. Furthermore, names like TSLA are completely ignoring the selloff and continuing to squeeze higher. 

The bottom line is that last night's headlines will likely be in play for a good while on the geopolitical front and the national/international news flow for the foreseeable future. But none of us knows the exact fallout or consequences, intended or otherwise, from this event.

These are known unknowns, to be sure. And our focus should be even more on how the market handles and digests this news beyond today (still officially in Santa/holiday rally territory) and especially once we commence the first full week of trading next week with presumably a busier Wall Street trading desk making moves.