I don't have any idea either but I'll take a guess. To date, the european markets which are open be4 us tank whenever it becomes clear that war is imminent. Interestingly, commentators on CNBC Europe portray the european perspective as that of a difficult protracted war, almost the opposite of the domestic perspective. My guess is that Europe realizing we are going to war is good for one tank this coming week, perhaps to test the SP 775 low. Then our market will suck in some more money (i.e. rally) when the war actually starts. That will set up Alexander Hamiltons waterfall decline because our market has discounted a best case scenario for the war (unlike the previous gulf war where we were expecting far worst). My guess is the truth is in the middle, neither best case, nor worst case. But as soon as something bad happens to disturb best case, we waterfall tank. While it is fun to guess the market I hope I am wrong about the military scenario.
The general idea is that war brings out extremes in sentiment (both directions) that can be faded.
Zeev said,
I have no idea how the market will react to actual opening of hostilities