The worst is behind us! That's how the rapid rally in US equities after the news of a two-week ceasefire in the Middle East reads. About 400 of the 500 S&P 500 constituents closed in the green. Only the energy sector, spooked by the drop in Brent and WTI, lagged. The VIX volatility index posted its largest decline since the tariff episode tied to the White House's Liberation Day measures. The catalyst, as then, was the TACO strategy — "Trump Always Chickens Out."

Performance of US equity indices

Since Donald Trump took office, the S&P 500 has produced ten sharp rallies. Nine of them were driven by TACO, delivering investors a cumulative 52% gain. If you'd held stocks continuously from inauguration to today, you'd have made only about 12%.

No wonder investors were on edge. They treated Trump's talk of ending the war in 2–3 weeks, followed by threats to destroy a whole nation, as part of the game. Tradition says the S&P 500 tends to rally at the finish of that game — and now it finally has. Yes, the parties remain far apart, but both sides signal some interest in peace. That's enough to declare the worst over. Time to buy US equities.

S&P 500 performance

The six-day S&P 500 rally — the longest since September — was driven by the fastest hedge-fund short covering in the index since the pandemic, according to Goldman Sachs.

CFRA believes that events may follow a 1990s pattern. After Iraq's invasion of Kuwait, oil hit a peak in October 1990. Three months later, the S&P 500 jumped by 12.4% amid de-escalation and falling Brent. That template looks applicable now: ceasefire headlines and talks have already pushed North Sea crude lower. Few expect it to quickly resume an uptrend, leaving US indices room to run.

They are not even deterred by the Fed's firm intention to keep interest rates high. The minutes of the March FOMC meeting showed that officials are genuinely concerned about the risk of entrenched inflation. That cut the market's odds of Fed easing in 2026 from 44% to 25% and pushed US Treasury yields higher. If not for TACO, the broad index would likely have retreated. Consumer price data for March could change that.

Technically, the daily chart shows that the S&P 500 has confidently broken above all three moving averages that comprise the Bill Williams Alligator indicator. That signals total bull dominance and supports adding to long positions established at 6,620. Pivot targets for long entires are 6,890 and 6,950.