Ceasefire Rally: Can The Market Hold New Support

Published on April 9, 2026

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Upon hearing of the ceasefire, oil prices plummeted by nearly 20%, and the stock market surged. In doing so, the S&P 500 broke well above resistance. Accordingly, the old resistance of the 200-day moving average (DMA) now becomes support. While no one knows whether the ceasefire will hold, the market is entering a seasonally favorable period. Further, with lower prices, especially for many of the largest-cap stocks, we suspect these companies will announce large buyback programs. The positive combination of events should be bullish. To confirm, we will want to see the moving averages that previously crossed in a bearish fashion, uncross, and for prices to start establishing higher highs. To wit, we would like to see the S&P 500 rise above the arching trend that was in place prior to the conflict.

We recently noticed a strong market parallel to the 2025 tariff-induced Liberation Day market downturn, as circled below. At that time, the market dropped through the 200 DMA and then tested it from the bottom, but failed to hold. While the recent activity looked similar, we are now decisively above the moving average and sitting at the 50 DMA (blue). The moving averages will act as support, and trapped longs will likely act as resistance. The 2025 scenario circled below is off the table for now. Obviously, the ceasefire will be fragile, so headlines will still have a big impact on prices.

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Over the last two days, we discussed that a rally-building setup was in place, and all that was needed was a catalyst. As mentioned above, that actually came yesterday. But there is more to this analysis.

Three weeks ago, the S&P 500 broke its 200-day moving average at 6,644. That breach, on March 19, triggered a swift continuation lower as the index dropped into the low 6,300s before buyers stepped in. Yesterday's close sat at 6,617, still a handful of points below the 200-DMA. Then this morning, the ceasefire announcement changed the math entirely.

The opening gap carried the index cleanly through the 200-DMA. That's the good news. The complication arrived almost immediately as the rally ran straight into the 50-day moving average at 6,784 and stalled. That's not surprising. The 50-DMA has been declining since February, and overhead resistance from a falling moving average doesn't evaporate on a single day's news. The market is now sandwiched between two key levels: 6,644 to the downside and 6,784 to the upside. How it resolves that range in the coming sessions tells you a great deal about whether this is a durable recovery or a relief rally that fades.

There's reason for measured optimism. The selloff from March 19 into the lows wasn't a calm, orderly decline. Put option volume approached record territory, VIX spiked hard, and breadth collapsed to levels last seen in late 2022. That kind of fear doesn't just evaporate; it creates fuel. Deeply oversold markets that reverse on a catalyst tend to follow through, particularly when the catalyst is credible enough to shift institutional positioning.

Earnings season adds another layer. Q1 reports start landing this week, and expectations were cut aggressively enough during the selloff that "better than feared" is a realistic bar for a broad swath of S&P 500 companies. Modest beats matter here because they tend to accelerate the execution of share buybacks. Companies sitting on authorized repurchase programs often step in after sharp drawdowns: management sees the stock as cheap, the board has already approved the authorization, and buybacks become mechanical, underpinning the rally regardless of the next headline.

The two-level framework is the right lens for investors right now. Use pullbacks toward the 200-DMA at 6,644 to add exposure; that's your line in the sand. The next bull objective is a clean weekly close above the 50-DMA at 6,784. Until that happens, size your positions accordingly. The ceasefire gave the market a catalyst. Earnings season gives it a second one. Neither guarantees a straight line higher, but the setup is better than it looks on the surface.

Ceasefire Rally: Can The Market Hold New Support

Oils Plunge Feeds Fed Funds Trades

Crude oil prices collapsed by more than 15% on the ceasefire agreement, one of its sharpest single-session drops in years. Assuming the Strait of Hormuz is open, the supply shock will lessen dramatically. From the Fed's view, rising energy prices were causing angst. Weakening labor market data, coupled with inflationary high oil prices, essentially put monetary policy in a wait-and-see mode, from what was likely a cut or two by year's end.

Energy is both a direct input into CPI and a psychological anchor for consumer expectations. With crude prices retreating, the disinflationary impulse could show up in data within weeks. Following the ceasefire, Fed funds futures, as shown below, now price in a 27% probability of a rate cut by December, a decent shift from zero expectations just 24 hours ago.

For now, the bond market is treating the ceasefire as a green light — and the energy-to-rate-cut pipeline is the trade to watch for both bonds and stocks.

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