Market View: April 2025

By Argent Wealth Management, LLC on April 15, 2025

Conclusion

• The stock market is a forward indicator.
• During market volatility there are signals to look for when assessing when the right time to get more aggressive is.
• There will be opportunities born from this volatility, but patience for now is important.

Market Signals

Wednesday, April 9th was a 151:1 up day in volume which is the second highest ever. This came off the back of near record low “trading” sentiment. What happened? Trump reversed course, bringing down tariffs to 10% on most countries for a 90-day negotiation period. He hit China with even higher tariffs as they retaliated (unlike most other nations, who called to negotiate).

Fig. 1: NDR Multi-Cap Institutional Equity Series Advance/Declining Volume (Daily)

Fig. 2: S&P 500 vs. NDR Daily Trading Sentiment Composite (Daily)

Sector and Market Returns Year-to-Date

The full extent of the knock-on effects of current or future economic and tariff policy is still unknown. That is likely to leave investors on edge, potentially limiting stock market upside until there is more clarity. There will be opportunities born from this volatility, but patience for now is important.

The S&P is now down a bit over 10% year-to-date (as of April 11, 2025). The S&P 500 corrected about 22% from an intra-day high to intra-day low.

Fig. 3: SPDR S&P 500 ETF Trust (Daily)

What is a Typical Correction Pattern?

Due to Wednesday, April 9, the stock market is on step 2 of the “W” pattern typically seen in corrections. Stock markets typically follow a four-step bottoming pattern.

1. Sell-off (downtrend since February 19).
2. Rebound (April 9).
3. Retest of low during sell-off (TBD).
4. Breadth thrust and new bull market (TBD).

What to Watch for in a Correction

If the stock market were to retest recent lows, watch for less selling pressure, and less downward breadth thrusts as a positive signal that it is only a retest. For example, are cyclical sectors holding up better than they were in the last sell-off? How much down volume is there compared to the last sell-off?

If the stock market experiences step 3, or skips step 3 and investors want conviction the stock market is on step 4, look for breadth thrusts. For example, a second 10:1 up volume day without an intervening 10:1 down volume day is historically bullish. Another bullish signal would be if 90% or more stocks are above their 10-day moving average. This indicator was at 40% on April 9 before dropping down to 18% again yesterday, April 10.

Fig. 4: S&P 500 Index vs. NDR Multi-Cap Equity Series % of Stocks Above Their 10-Day Moving Averages

Ned Davis Research has a thrust watch report. If 5 or more indicators turn green, historically that correlates with a resumption of a bull market.

Fig. 5: Breadth Thrust Report, Ned David Research

Stay the Course, Every Sell-Off is for a Different Reason

Through all of this it is important to stay the course, and remain disciplined within your long-term asset allocation plan. In other words, don’t try to time the market. Stock markets move quickly, and investors can be left missing much of the initial gain if the bull market were to resume. The initial leg of bull markets is often powerful, with significant gains in the first days and weeks.

Unlike most stock market declines, this volatility is not born from structural issues (like the 2008 global financial crisis, or the 2022 sell-off due to higher-than-expected inflation), or a global pandemic (Covid-19). This volatility is due to economic policy that can be reversed just as quickly as it was enacted. Although volatility and uncertainty itself can cause economic damage near-term, a reversal of policies can also re-ignite positive sentiment within what is by many measures a strong economic backdrop.

Economic Indicators

Credit conditions remain strong. This would likely drop prior to a recession. Corporations are in good shape.

Fig. 6: NDR Credit Conditions Index and Its Components (Monthly)

Fig. 7: Corporate Leverage and Interest Coverage Ratio (Quarterly)

Leading Indicators for the 35 countries in the OECD (Organization for Economic Cooperation and Development) remain positive, indicating recession odds are low. The job market remains robust with over one job available per unemployed.

Fig. 8: NDR Global Recession Probability Model vs. MSCI ACWI (Monthly)

Fig. 9: Wage Growth Tracker vs. Job Openings per Unemployed (Monthly)

Credit card delinquency rates remain low. Inflation is coming down, giving the Fed room to lower rates, buttressing the economy. The Fed currently has rates at 4.25-4.5%. This leaves them plenty of room to lower rates.

Fig. 10: Credit Card Delinquency Rates (Monthly)

Fig. 11: Consumer Price Inflation (% 1YR)

Despite Volatility, Bonds Remain a Good Diversifier

1. Yields have risen recently, whereas they traditionally act as a haven and move down as bond prices rise during times of equity sell-offs. There are only three years in recorded history where both stocks and long-term treasury bonds lost money in the same year. Some money is shifting to money market funds and other developed currencies where investors may have been under-exposed heading into the tariff negotiations.
2. Short-term dislocation such as hedge funds exiting complex arbitrage trades are putting upward pressure on yields, and these issues are likely to be resolved with the worst-case tariff scenario off the table.
3. There is no hard evidence that other countries are dumping U.S. Treasuries-however, nations such as China have been gradually reducing their U.S. Treasury exposure over time.
4. In the past, buyers have stepped in at key levels such as 4.75%, limiting potential downside.

Fig. 12: Treasuries

Sources: Fig. 1: Ned Davis Research, Inc. © 2024 on 4/10/2025, Fig. 2: Ned Davis Research, Inc. © 2024 on 4/10/2025, Fig. 3: Factset, Argent Wealth Management, LLC © 2024 on 4/1/2025, Fig. 4: Ned Davis Research, Inc. © 2024 on 4/10/2025, Fig. 5: Ned Davis Research, Inc. © 2024 on 4/10/2025, Fig. 6: Ned Davis Research, Inc. © 2024 on 3/31/2025, Fig. 7: Ned Davis Research, Inc. © 2024 on 4/11/2025, Fig. 8: Ned Davis Research, Inc. © 2024 on 4/7/2025, Fig. 9: Ned Davis Research, Inc. © 2024 on 4/10/2025, Fig. 10: Ned Davis Research, Inc. © 2024 on 4/10/2025, Fig. 11: Factset, Argent Wealth Management, LLC © 2024 on 4/11/2025, Fig. 12: Factset, Argent Wealth Management, LLC © 2024 on 4/11/2025