Hard Work Begins

Published On: April 21, 2025

Written by: Ben Atwater and Matt Malick

The market is damaged, and it has a lot of work to do to repair that damage. To better understand how much heavy lifting is ahead, we will look at a chart.

During tumultuous market times, technical analysis can help us create a framework for where the market stands and the challenges it faces.

Technical analysis of stocks is the study of historical market data, including price and volume, to predict future market behavior. A common tool for technical analysts is charting.

Technical analysis is often effective because it is a self-fulfilling prophecy of sorts. Many machine traders and human traders employ technical analysis, which often drives markets at important junctures.

Below you will find a chart of the Standard & Poor’s 500 stock index from intra-day trading on Thursday. We will use this chart for our exploration of market action.

Just this week, the 50-day moving average crossed over the 200-day moving average (orange line crosses blue line). This phenomenon is ominously called “The Death Cross.”

The last death cross occurred in 2022. One month later, the S&P 500 was down 5%, and about six months later it was down about 7%. The maximum drawdown (or loss) in that six-month span was about 12%.

However, looking at the last 20 death crosses, one year after the “death cross” the market was higher 80% of time. So, even if the death cross is a bad short-term omen, like it was in 2022, it does not mean the market will fall longer-term.

Traders are looking at the charts for additional ideas about the direction of the market.

On the downside, it would not be surprising to “retest” the recent market low, but you do not want to see the market break through the recent low. Therefore, traders are looking at 4982 to see if the recent low holds.

On the upside, bulls would like to see the market stabilize and begin to work on trading back above the 200-day moving average, currently at 5751. When the market overtakes the 200-day moving average, then traders will want to see stability and consolidation of this move. And then, ultimately, over the long-term to take out the February 18, 2025, highs of 6010.

For now, we are in a battle with the bears who are looking for a retest and breakthrough of the lows. Bulls on the other hand are looking for the market to rise above the 200-day moving average.

As these moves unfold over the coming days and weeks, patience will continue to be the key to riding out the present tumult. Now is not the time for dramatic action.