Firstly The price action was already showing resiliency last Thursday before the Good Friday holiday. The market went down initially following Trump’s national address over the Iran war update, as investors were anticipating an end to the war—but Trump said to continue instead. Yet the market recovered almost all its losses by end of day, showing strength.

Some investors may still think that the worst isn’t over because the ceasefire looks fragile—Israel is bombarding Lebanon and Iran said the ceasefire includes non-bombing of Lebanon. Iran has continued to restrict ship passage through the Strait of Hormuz to about a dozen a day and is imposing tolls. The US isn’t happy about the tolls as the ceasefire was contingent on an open Hormuz.

The following Tuesday was the deadline for Iran to open Hormuz—if not, the US would target power plants and bridges. Monday, markets were cautious but again still ended up in the green for the day. And when Trump announced the ceasefire, albeit temporary, the market rallied on hopes that negotiations may bring the war closer to an end.

Finally So that’s where we are—the S&P 500 is above its 200DMA and it is a positive sign. Can it go below again? Of course it’s possible, but we believe it is unlikely because bad news is no longer sinking the market. The direction is closer to de-escalation than escalation. If indeed the S&P 500 sinks below the 200DMA, then we risk-off accordingly.