There have already been a number of reports of Iranian attacks against Israel in response to the assassination of officials in Damascus. Today, U.S. Senator Rubio said:
- Barring last minute developments, Irene will attack Israel
US stocks are lower with the NASDAQ index down -1.34%. These declines are offset by the small-cap Russell 2000 index (-1.31%). The S&P and Dow industrial averages are down about 1% each.
US yields are lower. Gold is higher. Is a feeling of risk aversion manifest in the foreign exchange markets?
After that ?
It seems that there is an answer as a fait accompli. Most of the time, these fears come and go. Unless there’s an all-out World War III (in which case we’re all dead), this represents more of an opportunity to “buy the dip.”
Easier said than done, but it tends to happen – eventually.
Looking at the S&P Index, today’s low price is equal to today’s low price and is close to the low prices from earlier this week at 5138. The low price reached 5137.39 until here. Dip buyers have therefore put their “foot in the water”.
Does it hold?
We don’t know, but for traders who want to let the market decide, the level has been a support target so far that has attracted some buying. A move below would cause traders to look towards the 5109 level which housed the lows dating back to March 15. Below this level and 5056.92 up to 5042 are other targets (see chart below).
However, so far, the lows from earlier this week maintain support for the broader S&P index. Dip buyers buy dips. If the price falls below, we move lower and move to the next target, but ultimately the threat of war is a “buy the dip” trade.
cnbctv18-forexlive
