George....
I would agree that should it become apparent that an invasion of Iraq would not be necessary the markets would have a good solid rally but I think it would be very short lived. Iraq is not what has taken the markets down - they are down first and foremost because of the absurdly high valuations which are still very high, and next because of a slowing economy, high debt, lack of earnings, and other economic dislocations as we come out of the bubble.
At the moment, Iraq represents a vague fear of something unknown that may or may not happen sometime in the future. If it does come about, it might or might not turn out ok. The problems with high valuations and the weakening economy are present realities now and are in and of themselves plenty to take the market down further with or without a war with Iraq.
Just my opinion, though.
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