The markets have started to show signs of steadying as April approaches. However, looking back at historical data reveals that this stability might not be long-lasting.

The recent upsurge in the S&P 500 allowed the major index to surpass its important 200-day moving average, which serves as an indicator of market sentiment over an extended period.

Following new research by Sundial Capital Research, the index had maintained a position above its 200-day moving average for 336 consecutive trading days. Yet, concerns related to tariffs caused the index to dip below this key threshold for ten successive sessions.

By examining data dating back to 1946, Sundial Capital Research identified 11 instances where the S&P 500 spent over 200 sessions above its 200-day moving average, then dipped below it for a period ranging from five to 15 sessions before reclaiming it. Subsequently, three months later, the average return was -2.9%, six months later, it was -1.1%, and one year later, it was -1.1%.

Jason Goepfert, a strategist at Sundial Capital Research, highlighted that although regaining the 200-day average is generally positive, past trends suggest that future returns may not be as strong. Any swift reversal in the coming days could cast doubt on the sustainability of previous findings.

Various factors contributed to the index slipping below the 200-day moving average, such as fluctuations in the stock market due to uncertainties surrounding tariffs and mixed economic indicators. Economic data has shown signs of weakening, with subdued spending at US retailers, declining consumer confidence, and caution from major companies like Delta, FedEx, and Nike regarding near-term demand.

Despite recent data providing a somewhat brighter economic outlook, the markets are still vulnerable to volatility. As former National Economic Council director and current IBM vice chair Gary Cohn pointed out, uncertainty poses a significant threat to the market, which can lead to reevaluation and repricing of various assets.