The S&P 500 Just Flashed a Positive Signal for More Gains Ahead

As the stock market claws back its losses from the Liberation Day tariff surprise, the S&P 500 just flashed an optimistic technical signal.

After 32 days of jittery price action driven by trade headlines and policy uncertainty, the index broke back above its 200-day moving average on Monday.

This should give investors yet another reason to be hopeful that the market recovery will continue and extend into a rally, according to Adam Turnquist, the chief technical strategist for LPL Financial.

The indicator, which simply averages the S&P 500’s closing price over the past 200 trading days, is a helpful tool for investors to understand the stock market’s overall trend. Over the past 75 years, the S&P 500 has gained an average of 8.6% in the 12 months following a crossover.

Gains are typically stronger when the 200-day moving average itself has been sloping downward, with the S&P 500 returning 14% in the 12 months after the cross. When the 200-day moving average is sloping upwards, stocks gain less than half of that in the 12 months afterward — just 6.6%. Either way, the longer-term trend is higher in the months after.

Stock market gains in the wake of a trade deal with China have pushed the S&P 500 into positive territory year-to-date. In Turnquist’s opinion, the index’s breakout above the 200-day moving average could mean that the lows are in.

The stock market is not fully in the clear, though. The details of certain trade deals have yet to be ironed out, and long-term tariff rates could still change. The effective tariff rate is down from 22% to 13.1%, but that’s still the highest since the early 1940s, according to Fitch Ratings.

Still, the S&P 500’s bounce above the 200-day moving average is certainly a technical signal that the worst of the Liberation Day pain could be over.