Can somebody explain why the S&P didn't crash later in the afternoon after news of the Iran ceasefire collapse ?

[jmbar2]

3. My theory...

From what I understand, institutional investors are always hedged against major drops in markets, and take advantage of news to adjust their huge positions. They use AI to scan news reports, and trading algorithms immediately adjust their hedges when market news hits. They are in and out before the human traders even hear the news.

In the days leading up to Trump's threats, Big Money heavily hedged for a potential big dip if Trump carried out his threats against Iran. When Trump announced late yesterday afternoon that he would postpone Armageddon (fully anticipated move, and traded by insiders), it resulted in a violent reversal up in the Asian session of the futures market.

The overnight surge put a bunch of New York short hedges underwater. When the New York market opened, they had to cover their shorts today, forcing them to buy and driving up the market.

However, they can't do it all at once. Their orders are so big it would drive the price up even higher, making it more expensive to get out of their shorts. So they do programmed buys and sells at different times in the day, often triggered by news, to get the best prices. Like letting the air out of an over-inflated tire.

Some kind of news, or trigger, took the market down this afternoon on algorithmic selling, allowing more of them to cover their shorts at a better price, which drove the market up a second time.

I'm learning how this works by following TopStep TV during the day. It's a stock trading all-day broadcast whose personalities are all long-term market makers and traders. I could be wrong in this interpretation, but it is a possibility based on their commentary today.