Stocks closed higher on Friday and for the week, making it 3 up weeks in a row for the Dow, S&P 500, and Nasdaq, and 4 up weeks in a row for the small-cap Russell 2000 and mid-cap S&P 400.

YTD, the Dow is now up 2.88%; the S&P 500 is up 4.10%; the Nasdaq is up 5.28%; the Russell is up 11.9%; and the S&P 400 is up 10.3%.

What a difference a few weeks can make.

Optimism over a longer-lasting peace deal, following the ongoing ceasefire, and the recent declarations by both the U.S. and Iran saying the Strait of Hormuz was open, has lifted stocks.

Although, those announcements have been called into question over the weekend. Iran's Revolutionary Guard Corps (IRGC) said the Strait was closed and under their control ? firing on one ship and turning several others around. This is in sharp contrast to Iran's Foreign Minister's comments last week saying the Strait was open while the Israel-Lebanon ceasefire was in effect.

President Trump said on Friday the Strait was fully open, even though the U.S. Naval blockade is still in effect. But over the weekend he called Iran's recent actions a breach of the ceasefire agreement and said if they don't agree to a peace deal, the U.S. will resume bombing.

Peace talks are scheduled for Monday in Islamabad. But it's unclear who will attend. Or who on the Iranian side is in control with the authority to make a deal.

In the meantime, while a de-escalation in the Middle East sent stocks rebounding over the last couple of weeks, that was not the only thing lifting stocks.

Better-than-expected inflation readings, reassuring economic reports, and strong EPS outlooks, not only for the current earnings season that's underway, but also for the rest of the year with double-digit growth rates for the next 3 quarters, show there's plenty of reason for stocks to keep rising.

Earnings season kicks into gear in the coming weeks with another 491 companies set to report this week, and another 841 stocks on deck to report next week, with 5 of the Magnificent 7 stocks reporting in the coming days.

Last week's double-digit EPS and sales growth rates in some select big-tech/AI related stocks also showed the AI trade is alive and well and sent many big names to new all-time highs.

The latest Middle East tension/confusion is likely to put some renewed pressure on the markets. But I do not expect a lasting weight. And I expect stocks to resume their upward trajectory sooner rather than later.

Remember, geopolitical conflicts and events usually only have a short-term impact on the markets. And that over the last 40 years of geopolitical shocks, markets usually bounce back quite fast. And we literally just witnessed that play out again over the last few weeks.

Additionally, with the new highs we are seeing in the major indexes (S&P 500, Nasdaq, Russell, S&P 400), that bodes well for even higher highs. History shows, for example, that when the S&P reclaims its old highs after a correction, it usually surges past them rather than lingering. And six to twelve months later, its often sitting 10-15% above those previous levels.

That comports with my outlook for another double-digit gain this year.

And for that, I would not be looking at new volatility as reasons to sell, but as opportunities to buy.

See you tomorrow,