The U.S. stock market saw a historic rally yesterday, as equities roared back to life on news that the Trump administration announced a pause in some of its planned tariffs and sent the S&P 500 shooting upward for a +9.5% close. But despite that lightning-fast turnaround on the news, the SPX remains down more than -11% from its highs of 6147.43 on Feb. 19 and the technical picture may not be as rosy as it might have felt during yesterday’s surge as premarket futures data points to a lower open.

Consider the portrait for the S&P 500 ETF (SPY) chart, which will be examined because this product includes volume data, while the SPX symbol does not. While this breakneck rally took out some notable high points, the gap that formed on Apr. 2 just below 555 has not yet been filled. Notice as well that the longer-term downward trendline beginning with those previously mentioned SPX all-time highs near 6147 and connecting subsequent highs from late March/early April is still in play. Most major moving averages are still trending lower, and price also remains below them. In terms of momentum, the Relative Strength Index (RSI) rocketed out of the oversold area but also did not cross above the 50 midline that separates bullish and bearish directionality.

One crucial point to note as well is that the highs from yesterday came roughly back to a key resistance area, which is the old double-bottom lows near 550 on the SPY that price established last month, but the action did not break out to the upside. This is understandable given that there was already a very lengthy rally that took place, but this remains a key point to clear in order to establish potential trend shift. Going forward, the Volume Profile study shows heavy trading near the 540 and 560 levels, so these could be notable points to monitor for potential slowdown or consolidation in any further rallies. 

Overall, it’s important to remember that bear markets can include ferocious upside rallies that still remain within an overall downtrend. While this may indeed be the burgeoning movements of a new uptrend, the tipping point does not seem to have happened quite yet, so traders should beware of making rash decisions based on excitement rather than their trading plans.

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