When Markets Rally on Missiles: Reading the Signs Others Miss

A few days ago, I sent out a note that said: Buy when it makes no sense. That weekend, the U.S. launched an airstrike on Iran. By Sunday, Iran responded by attacking a U.S. airbase. Youʼd think the markets would crash, right? Instead, the opposite happened. The futures market opened at 3 p.m. PST on Sunday. After a brief dip, the S&P 500 started to rally—and just kept climbing. Oil? It dropped from $78 to $68. Natural gas fell too. And this was all before any ceasefire news came out (which, by the way, didnʼt hit until after markets closed). So what gives? This is a classic case of contrarian behavior when really bad news hits the tape, and yet the market shrugs… or rallies. It often signals that sentiment has gotten too bearish, or that the event was already priced in.

It reminds me of an old parable:

A man is caught in a flood and climbs to the roof of his house. As the water rises, a neighbor in a rowboat offers to rescue him. “No thanks,” the man says, “God will save me.” A little later, a rescue team arrives in a motorboat. Again, he declines: “God will save me.” Finally, a helicopter hovers overhead, but he waves them off. “Iʼm waiting on God.” The floodwaters rise and the man drowns. In heaven, he asks God, “Why didnʼt you save me?” God replies, “I sent you a rowboat, a motorboat, and a helicopter.” Sometimes the signs are right in front of us but we miss them because weʼre waiting for something bigger, clearer, or more comfortable. The markets work the same way. When missiles fly and markets rally, thatʼs your rowboat. When oil plunges despite war, thatʼs your helicopter. These arenʼt mistakes theyʼre signals. Smart money doesnʼt wait for the news to “make sense.” It watches how the market reacts to the news.

Sometimes the signs are right in front of us but we miss them because weʼre waiting for something bigger, clearer, or more comfortable. The markets work the same way. When missiles fly and markets rally, thatʼs your rowboat. When oil plunges despite war, thatʼs your helicopter. These arenʼt mistakes theyʼre signals. Smart money doesnʼt wait for the news to “make sense.” It watches how the market reacts to the news. And remember: it works both ways. Good news—like strong earnings, bullish inflation prints, or even Fed pivots can cause the market to drop. Why? Because it was already priced in. Or because traders were positioned the wrong way. Or because that "good" news created the perfect exit ramp for institutions. So next time things feel irrational, zoom out.

Ask yourself: What raft is the market sending right now?