A trader is seen conducting business on the floor of the New York Stock Exchange (NYSE) in New York on October 23, 2018. This activity could indicate the end of the downtrend for the S&P 500.
On Monday, the S&P 500 bounced back from the same level it did on March 13. The historical data for April, showing positive trends and low trading volume, may also suggest a forthcoming recovery.
During Monday's trading session, the stock market displayed a positive technical sign as it climbed from a lower point. Despite an initial dip due to concerns about upcoming tariffs on April 2, stocks later recovered, with the S&P 500 showing a slight rise after a previous fall of over 1.5%.
This turnaround could be an early indication of a double bottom pattern, which typically signifies the end of a downtrend and the onset of an upward trend. Craig Johnson from Piper Sandler mentioned the likelihood of a double bottom formation in the S&P 500, with the second bottom potentially seen in Monday's session.
The S&P 500 hit a low point similar to that of March 13 at around 5,500 but recovered thereafter, trading positively at 5,586 by 2:29 p.m. on Monday. This trading pattern may suggest a possible market rebound in preparation for the generally optimistic month of April.
Johnson noted that the decrease in trading volume below the 10-week average, along with the lowest trading volume seen since January 14 last week, might indicate a lack of aggressive selling by investors. This low volume indicates a potential positive direction for stocks, especially as investors await the tariff announcement on April 2.
With investors seemingly in a cautious phase until the tariff deadline, Johnson suggested that the uncertainty-clearing event on April 2 could be a significant turning point, driving stock prices higher as investors regain confidence.
Moreover, Johnson highlighted the historically bullish nature of April for the stock market, suggesting that a market bounce would align well with the usual positive trends observed during this month.