Following one of the biggest short squeezes in recent memory (4.9.25) and within the confines of the S&P 500’s pattern of lower price peaks and lower price troughs, I expect upside and downside volatility to continue despite the recent tariff news. What are we now watching?

The Catastrophic Stop model increased to 47.9% from 40.7% last week due to one of the model’s Trend Factors shifting positive. Supporting the Trend Factor are measures tracking Oversold Mean Reversion (showing that the markets reached extreme oversold levels and selling exhaustion), Sentiment (pessimism reached extreme levels similar to 2002, 2009, and 2020).

The Catastrophic Stop model level is 40.7%, down from 51.4% last week and on the cusp of a sell signal. The model’s decline was due to volume-adjusted demand falling below volume-adjusted supply for the first time since September 2023. On balance, the model’s technical indicators are bearish, while the external indicators are low-neutral.

After the S&P 500 (SPX) broke the twin support lows of 5500 to 5488 (discussed last week), a cascade of selling quickly followed. The associated selling pressure exceeded early March levels. Thus, the Low-Rally Retest bottoming sequence coupled with breadth thrusts begins anew.  

The DH Smart Value Portfolio continues to invest in companies producing excess returns through positive economic profitability, supported by solid balance sheets (quality), significant cash generation (profitability), and trading with considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.

In March, policymakers acknowledged increased uncertainty regarding the economic outlook but maintained an expectation of a 50-basis-point reduction in interest rates for the year, consistent with their December forecast. GDP growth projections were revised downward from 2.1% to 1.7% for 2025, while 2026 and 2027 forecasts were adjusted to 1.8% (from 2%) and 1.8% (from 1.9%), respectively.

Global stock markets experienced a volatile month, shaped by a mix of macroeconomic shifts, policy uncertainties, and key economic releases. Below, we explore the factors, issues, and data points that influenced the U.S., European, Emerging Market, Japanese, Canadian, and Pacific ex-Japan stock markets last month.

The U.S. stock market experienced significant volatility last month, primarily due to trade policy uncertainty and mixed economic signals. The re-elected Trump administration’s aggressive tariff proposals, including potential hikes on imports from key trading partners such as China, Mexico, and Canada, have eroded investor confidence. Concerns about an impending trade war have particularly affected export-heavy sectors, such as manufacturing and technology, contributing to a decline of over 4% in the S&P 500 year-to-date.

Bitcoin, the poster child for risk-on versus risk-off, continues to stress risk-off. Let’s revisit the S&P 500’s short-term Low-Rally-Retest bottoming sequence, including what could occur going forward and what we do and don’t want to see.

The Catastrophic Stop model level declined to 51.43% from 56.43% last week. The decline resulted from the “High Yield and Emerging Market Bond Factor” reversing back to neutral from bullish (reversal occurred March 26). Technical measures calling U.S. Stock/Bond Relative Strength, Short-term Trend, Intermediate-term Trend, and High Yield OAS spreads are bearish.

Join Art Huprich, CMT, on Wednesday, April 23, 2025, at 4:00 PM EST, for the monthly Day Hagan Technical Analysis. Art will be discussing the current technical condition of the equity markets (domestic, international, and emerging) based on supply (selling pressure) and demand (buying interest) analysis.

Watch Art Huprich, CMT, break down S&P 500 trends, market corrections, and recession signals in this March 25, 2025, webinar replay. Financial advisors are encouraged to watch for the latest market technical analysis, smart sector strategies, and risk management insights —don’t miss out!

The Catastrophic Stop model increased to 56.43% from 51.43% last week due to the “High Yield and Emerging Market Bond Factor” shifting from neutral to bullish. In other words, the fixed-income markets are holding up well. We’d also note that global equity breadth is constructive, and volume-adjusted demand continues to outpace supply.

The Catastrophic Stop model declined to 51.43% from 63.57% last week. The model’s technical indicators are now low neutral on balance due to the intermediate-term trend factor turning negative, joining the short-term trend and stock/bond relative strength factors discussed last week. Neutral readings remain in place for our breadth thrust and oversold mean reversion factors.

Following the domestic equity market’s heart attack-inducing decline, it needs a slow, methodical rehab to repair the chart damage. Friday started the process, but more is needed.

Although we set our clocks ahead over the weekend, stock prices fell back as macro risk and political headline fatigue weighs heavily on Wall Street’s psyche. An oversold rally is due (Figure 1). If it doesn’t occur soon, it will be bearish.

The Catastrophic Stop model declined to 63.57% from 70.71% last week. The model’s technical indicators are now neutral on balance due to the short-term trend factor turning negative, joining the stock/bond relative strength factor. Neutral readings are in place for our breadth thrust and oversold mean reversion factors.

The DH Smart Value Portfolio continues to invest in companies producing excess returns through positive economic profitability, supported by solid balance sheets (quality), significant cash generation (profitability), and trading with considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.

In February 2025, global fixed-income markets fared well, though they faced considerable turbulence fueled by geopolitical tensions, shifts in monetary policy, and changing investor sentiment. A key incident contributing to this uncertainty was the contentious meeting between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky on February 28.

International equities outperformed the U.S. in February, with Europe leading the way. Spain, the U.K., Germany, Hong Kong, and China gained significant ground while the U.S., Taiwan, Australia, Japan, and India lagged.