I have seen numerous posts and comments about the rebound in US equity markets as we finish wirth April and head into May,. the gist of these being that we are “back where we started “
I get it, I do April 2025 is a month that many would like to forget, if only it were that simple and however much we would like it to be it isn’t
Year to date the S&P 500 is down by -5.45% as I write, and over the last three months down by -7.92%.
True it’s all but flat over one month and up by more than +5.0% in the last week and trading ahead of its 50 Day Moving Average as you can see below having posted 6 consecutive positive trading days in a row.
Now that last part sounds bullish, doesn't it?
S&P 500 Index
Source:Barchart.com
Digging deeper
However, if we dig beneath the surface, we find that not everything is as rosy as it might first appear.
Take the Magnificent 7, for example,
4 of the 7 stocks are still down over the last month, and all are nursing year-to-date losses.
Tesla’s 5-day recovery is impressive, but despite that it remains almost -30.0% in the hole during 2025 to date.
Apple and Amazon are perhaps the two stocks in the group that are most affected by the tariff turmoil and both names are down substantially over the last 50 days.
Magnificent Seven (?)
Source:Barchart.com
These stocks were the leaders of the pre Trump bull market. They may yet bounce back and assume leadership once more, but I am not holding may breath right now.
What about the Quality of the recent rally?
If the market is digging itself out of a hole, then I would like to see it achieve that, with rising volumes. Simply because higher volume moves are more sustainable, more believable.
However if we look at the volumes in the S&P 100 index, which contains many of the movers and shakers of the US and Global equity markets. We find that just 3.90% of these stocks have a higher 10-day average volume than their monthly average which tells us that volumes have been falling after an up-tick in early April.
S&P 100 Stocks with rising volumes in late April
Source:Barchart.com/Darren Sinden
We can infer from that that the post-liberation day sell-off was made on good volume, but the rebound not so.
To reinforce that point, here is the price history and turnover of the S&P 500 SPDR SPY. An ETF that tracks the S&P 500 index.
We can see the volume traded each day in SPY in the far right hand column of the table below.
Just contrast the figures from early April with those seen over the last week or so.
SPY US Price History
Source:Barchart.com
Moving Averages
Next let’s consider the MA% heatmap for the S&P 500 sectors.
The front end looks pretty good, doesn't it? But what about the rest?
There are very few sectors in the 50 Day MA column, and beyond, that have readings above 50.0%
This heat map makes think of a comment from one of the world's best traders Paul Tudor Jones, who famously said that:
“Nothing good ever happens below the 200 day (MA line)”
As I write 65.0% of S&P 500 stocks sit below their 200 day MA ,as do 56.0% of the S&P 100 names, and 59.0% of Nasdaq 100 stocks.
Source:Barchart.com
Bigger issues
Of course the issues created in April run far deeper than the values of, and technical levels associated with the stock market, and those issues will be far harder to gloss over.
Take these charts from US investment bank Goldman Sachs, part of research note that examined how US corporates will use their cash, in the balance of 2025 and beyond
Goldman found that business optimism, and perhaps spending power have been hit, and hit hard.
Early readings about optimism among US businesses suggest that it has quite literally fallen off a cliff.
Not surprising perhaps when many business have no idea what their cost base and supply chain might look like in three or six months time.
Source:Goldman Sachs Research
The policy uncertainty, as Goldman politely describes the recent tariff turmoil, has the potential to dramatically affect how US corporations behave.
Goldmans found that the cash available for stock buybacks could fall by almost -20.0%.
Given that S&P 500 companies spent $942.50 billion buying their own stocks in 2024, that’s a significant hit.
Dividends could also be reduced as management becomes more cautious and conserves resources. S&P 500 stocks paid out some $629.60 billion in dividends during 2024.
Buybacks and dividends are seen as rewards for share ownership, both of which make stocks attractive.
Fewer buybacks and smaller dividends, could mean that US stocks lose at least some of their lustre.
I don't want to sound bearish but I do want to make you think about what lies behind the moves in equity markets, and think about the bigger picture, and beyond the headline moves in the S&P 500 and its constituents.
We are most definitely not back where we started, and don’t let anyone persuade you otherwise .
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