Where Do Stocks Head AFTER the Cease Fire?

I had to scramble a bit this morning and update the commentary because of the 2 week cease fire with Iran announced late last night. Gladly my assumption that we were moving to end the conflict was on target...so not as much last second shuffle.

This morning market futures are exploding higher by almost 3%. And this puts us back above the 200 day moving average for the first time in a while.

The real key is what comes next so we will tackle that in our market commentary below. 

Market Commentary

I stick by my claim made in the late March members only webinar that I don’t think the US has the stomach to stay in an extended war with Iran.

Not because we wouldn’t win. We are clearly the greater military power. But because the longer it goes on...the more damage to the economy done by higher oil prices...the less likely that Republicans win the looming mid-term election.

This is an unpopular war...and only grows more unpopular every time voters drive by a gas station to see ever higher prices...which is ALL DAY LONG.

So one way or the other I see the US trying to end this war in the not too distant future. HOPEFULLY with the Strait of Hormuz open thus easing pressure on oil prices...inflation...economy...and stock market.

The 2 week cease fire does make things tentative. And certainly there is headline risk of things going south for a while. But it does fit into Trumps traditional style of negotiation.

We saw this other market rattling events like back in 2018/2019 with China Trade deals. Then the onset of new tariffs in the spring of 2025. And now with the Iran war.

The key is to appreciate the direction things are heading. He said last week to the nation that this war should end in 2-3 weeks. Thus, he wants out. And then used strong armed tactics to get Iran to the table leading to this cease fire.

Yes, there is headline risk of more bombings ahead...and then more peace talk. This may rinse and repeat quite a bit. But directionally it says we are moving towards peace.

The market certainly agrees or you would not have as big of a move in both the drop in oil this morning...nor the sky rocketing of futures.

For these reasons is why I remained bullish throughout this recent correction as just another buy the dip opportunity.

Let’s move on to the current state o the economy. In this case we do see a recent softening of the economy with GDP Now lowering its Q1 estimate from a previous +3% in late February down to +1.3% today.

No doubt the culprit is more money going into the gas tank...and less to other parts of the economy. Again, I see this as temporary and thus not sweating this modest GDP read.

Perhaps the most interesting thing is this chart below showing the recent movement of earnings expectations for the S&P 500.

Note how earnings growth projections are rolling higher of late for this quarter and the next 3. This tells you that Wall Street analysts are not really worried about the current situation with Iran harming the economy and thus corporate earnings.

Add on top of this that the recent pullback in stocks has moved the forward PE down from 21 to just under 18. That combination of earnings growth and more attractive valuation will have many investors pressing the Buy button as soon as this Iran situation is nicely tucked away.

But Reity, what if the cease fire doesn’t hold and the war with Iran continues...and oil prices stay aloft a lot longer?

Yes, this does bring on a touch more concern...but still most likely to be bullish.

Note that each $10 increase for a barrel of oil is expected to lower US GDP by 0.1%. Thus, the current $50 increase is expected to trim 0.5% from GDP.

That is not a recession...that is just lower growth. Plus, it would unleash a lot more drilling and supply in the US given our ample reserves. That would both spark some additional economic activity while also relieving some of the inflationary pressure.

So yes, I would be a tad more cautious in that environment looking for any signs of recession...but still think we come out OK. And then spring ahead whenever the war concludes.

Note that even in this rocky market environment, with the S&P firmly in the red on the year, our Zen Investor portfolio has rallied over +12.8% year to date (as of Tuesday’s close...closer to +18% mid day Wednesday).

That says to me it’s a stock pickers market. Meaning the average stock may not be doing that well...but the best stocks will succeed.

What is the mark of the best stocks? Now, just as in all points in human history, the calling card of the best stocks is healthy, consistent growth trading at attractive prices.

The Zen Ratings is absolutely the best possible system for rooting that out given the 115 factor review of each stock covering growth and value...as well as financial health, sentiment, safety, momentum and our proprietary AI Factors which point to stocks most likely to outperform. 

This does not mean that we will magically generate gains in the worst of times, like a day the market is down 1-2%. But when the dust settles, and emotions are more even keeled, then investors will cling to the best stocks and avoid the worst.

That is precisely when we enjoy our advantage. And that shows up clearly in our collection of 20 stocks that have gained so much on the year.  

What To Do Next?

Discover my Zen Investor portfolio that relies upon my 45 years of investing experience. 

During that time I have learned vital lessons from 7 bear markets…8 bull markets and just about everything else the “Mr. Market” can throw at us. 

I use this knowledge to create a detailed investment plan. Then lean into our proven Zen Ratings quant model to select the best stocks given their average annual return of +32.52%. 

In total the Zen Investor portfolio now has 20 top stocks that are hand picked for today’s unique market landscape. 

And as shared above it is doing very well in this rough and tumble year of 2026 as our portfolio is up +17.83% YTD even as the S&P 500 has been painted red.  

Plus 2 new stocks were added this week that both have stellar upside potential. 

If you are curious to learn more, and want to see how you can have access to my current top 20 stocks, then please click the link below to get started now. 

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Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor of the Zen Investor

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