US equities entered the Memorial Day-shortened week with risk appetite supported by de-escalation hopes in the three-month US-Iran conflict and heavy positioning in technology. WTI traded below $90 on Monday for the first time since mid-April, as markets weighed reports of a potential 60-day ceasefire that could reopen the Strait of Hormuz and separate talks on Iran’s enriched uranium. President Donald Trump said about 5% of the details remained, while the world continues to face a shortfall of more than 600 million barrels linked to Iran’s partial closure of the Strait in March. Diplomatic efforts also faced complications, including continued Israeli strikes in Lebanon and an unsuccessful push on Monday for Arab-state recognition of Israel under the Abraham Accords, with talks proceeding via Pakistani mediators.
Sentiment indicators and flows pointed to extended demand for risk assets. Bank of America’s Bull & Bear Indicator rose to 8.0 last week, while US equity funds recorded an eighth consecutive week of inflows; tech funds alone took in $9 billion, the largest weekly increase since October 2025. Goldman Sachs said hedge funds bought technology at the fastest pace in almost three months and now hold their biggest technology overweight versus the MSCI World index in over five years. On charts, the S&P 500’s May 14 peak stood at 7,517, with RSI easing to 68; longer-term trendlines imply 8,200-8,300, and a pullback could find support near the 50-day SMA around the prior 7,000 resistance.
Ceasefire Prospects And Oil’s Impact On Markets
A potential ceasefire deal with Iran could be a major tailwind for the market. Lower oil prices would act like a tax cut for consumers and businesses, boosting the outlook for corporate earnings. We’ve seen WTI crude futures already pull back over 5% to below $88 a barrel on these hopes, signaling a clear path for stocks to move higher.
The options market seems to agree with this optimistic outlook. The CBOE Volatility Index (VIX), often called the market’s “fear gauge,” has fallen to 12.5, a level not seen since late last year, indicating very little demand for protective puts. This suggests traders are positioning for calm and continued upside in the weeks ahead.
Positioning And Technical Perspective
Given this backdrop, we believe traders should consider adding bullish exposure through call options on the SPDR S&P 500 ETF (SPY) or the Invesco QQQ Trust (QQQ). Buying short-dated calls, or using bull call spreads to define risk, seems prudent to capture a potential sharp move higher. This strategy allows for leveraged gains if the rally accelerates as expected.
We are mindful that extreme bullish sentiment, with the latest AAII survey showing investor bullishness at 47%, has historically preceded market pullbacks. However, we also recall the late 1990s, where markets remained exuberant for longer than many bears anticipated. The current momentum suggests the path of least resistance remains upward for now.
The technical picture also supports a continued advance toward the 8,200 level on the S&P 500. Should there be any unexpected weakness, we would expect strong buying support to emerge near the 7,000 mark. That level represents a confluence of the 50-day moving average and a previous psychological resistance level.
