S&P 500 Flashes Rare Pattern, But Market Signals Remain Divided

April brought an unusual twist to the U.S. stock market. The S&P 500 plummeted more than 10% during the month, only to rebound and close within 2% of where it began.

According to technical analyst Subu Trade, this rare combo has only happened five times since 1926 — and each time, a deeper correction followed. Historically, the index dropped an average of over 15% within a year of such an occurrence.

As of May 6, the S&P 500 sat at 5,650 points, dipping 0.64% on the day and breaking a nine-session winning streak — its longest in two decades. The broader index remains down nearly 4% for the year.

Still, interpreting this setup isn’t straightforward. While the historical pattern suggests caution, it’s worth noting the last time this signal flashed was in 1938 — in a vastly different economic landscape.

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Today’s market is supported by strong momentum in tech stocks and some bullish technical indicators, including a recent Zweig Breadth Thrust — often a sign of a rally forming.

However, headwinds remain. Trade tensions, a disappointing GDP report, and policy uncertainty — including unusual proposals like tariffs on streaming content — have rattled sentiment. At the same time, Wall Street has started to revise its S&P 500 outlook for 2025 downward, reflecting increased caution across institutional desks.

For now, traders are being advised to watch for clearer confirmation before betting on a bearish move, as conflicting signals keep the outlook murky.

Alexander Stefanov

With over 8 years of experience in the cryptocurrency and blockchain industry, Alexander is a seasoned content creator and market analyst dedicated to making digital assets more accessible and understandable. He specializes in breaking down complex crypto trends, analyzing market movements, and producing insightful content aimed at educating both newcomers and seasoned investors. Alexander has built a reputation for delivering timely and accurate analysis, while keeping a close eye on regulatory developments, emerging technologies, and macroeconomic trends that shape the future of digital finance. His work is rooted in a passion for innovation and a firm belief that widespread education is key to accelerating global crypto adoption.