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This happens a lot during war time. Baron Rothchild is famous for noticing this bullish reponse to wars in the 18th century and making a killing during the Battle of Waterloo hundreds of years ago. He coined the phrase 'Buy when there is blood in the streets' I remember the iraq invasion in 2003, market sold off before and rallied hard when the invasion started. I was short at the time This happens because: The weak longs all sell out in fear either just before the war starts or just after it starts (capitulation). This leaves more buyers than sellers. So the market goes up. Add to this the Short sellers who come in late (like i did back then) they get stopped out, adding to the buying pressure and making the war rally even more intense.
It feels day by day...lots of moving parts here. The high price of oil will be gangbusters for the energy companies but tough on the consumer. The Euro could pass 1.30 in the coming months as the ECB raises. Russia is a complete wildcard, but the US economy is strong overall. I feel like every day you've got a huge list of stuff that's bullish and stuff that's scary. Each day just feels like it's random what anyone cares about - and I'm starting to feel cheated if I can't get a 100 pt move on the SPX every day.
Similarly when the US started to bomb Iraq during the Saddam Hussein era, the stock markets went up massively.