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Are the markets about to reverse course and crash? That seems to be the number one question on investors’ minds today. The stock market recently staged one of its most spectacular “V-shaped” recoveries in history. And many investors are likely wondering if the worst is over. Let’s break down the move in detail.

The initial decline following April 2's “Liberation Day” press conference in the Rose Garden was the 5th fastest 10% decline in the last 75 years. Stocks don’t like uncertainty, and the Trump administration’s “shock and awe” announcement of global tariffs against every major trade partner created tremendous uncertainty.

Remember, 28% of S&P 500 revenues come from international markets. All those revenues would be impacted by tariffs. Moreover, few, if any, companies produce their goods from start to finish. In that context, the trade war had the potential to badly disrupt supply chains, resulting in higher costs, longer production times, and lower profit margins.

Peak to trough, the S&P 500 declined 20%, triggering what Wall Street seemed to take as a signal that a “bear market” was underway. At their nadir, stocks were trading three standard deviations away from their long-term trend, as denoted by the 200-day simple moving average (DSMA).
 

This was an extreme reading and one that suggested a “snap-back” rally would occur. And that is precisely what happened. Stocks have closed higher over nine straight days since the lows, with the S&P 500 now back at “the scene of the crime” and trading at the same levels at which it was priced when the Liberation Day tariffs were announced.
 

Historically, this kind of rebound/price action has been quite bullish in the intermediate-term: six to 12 months out, stocks are usually higher after a bounce like this. However, in the near-term, things are not so clear.

While many stocks are up quite a lot from the lows, Big Tech, which comprises 30% of the S&P 500’s overall weight and nearly 20% of S&P 500 total profits, has lagged. It will be very difficult for the overall market to storm higher without these companies participating in the rally.

Consider Apple (AAPL), the 2nd largest company in the S&P 500 (and the world) with a $3+ trillion market cap. While the S&P 500 has reclaimed its 50-DSMA and is moving to challenge its 200-DSMA, Apple remains well below both lines. In fact, Apple was recently rejected at its 50-DSMA and has since turned back down after announcing disappointing Q1 25 results.
 

None of this is good. If Apple and Big Tech stocks like it cannot catch a bid, the overall market will struggle. These are the stocks you need to keep an eye on in terms of determining what the next major market move will be.

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