April 2025 will go down in history as one of the most volatile months of the decade, marked by a historic spike in volatility, primarily triggered by successive announcements from President Trump regarding US trade policy. From the very first days of the month, global markets wavered in response to the announcement of new “reciprocal” tariffs on numerous trading partners, notably China, causing a sharp drop in indices and a surge in the VIX to levels not seen since the 2020 pandemic.
After entering bear market territory, markets experienced a spectacular rebound following Trump’s surprise decision to suspend most of new tariffs (except those on China) for 90 days.
This U-turn propelled the Dow Jones up nearly 2,900 points in a single session, the S&P 500 soaring by 9.5%-its best performance since 2008-and the Nasdaq by more than 12%.
This lightning rally, described by professionals as a “monster move off the low,” illustrated not only extreme investor nervousness but also their appetite for any political clarification.
In our previous monthly note, we highlighted that April is historically a strong month for markets, even during periods of stress. This scenario played out: despite a swift and deep drop at the start of the month, indices recovered, supported by a technical rebound and improving sentiment.
This April was also marked by the triggering of the very rare “Zweig Breadth Thrust” technical signal on the S&P 500. This signal, which has only appeared 11 times since 1978, occurs when the 10-day moving average of advancing stocks suddenly surpasses a key threshold, indicating a significant trend reversal. Historically, this signal has always been followed by positive performance at 1, 6, and 12 months, with remarkable reliability. The combination of this signal and tightening credit spreads suggests the end of the bearish phase and the start of a new bullish leg, even though short-term volatility is likely to persist.
Looking ahead to May, seasonality remains favorable: spring is traditionally a positive period for equities, especially after major corrections. The activation of the Zweig Breadth Thrust increases the likelihood of a continued rebound, even though the political context and uncertainties surrounding trade relations could still generate short-term turbulence. Investors will therefore have to contend with ongoing volatility, but history points to a gradually bullish trend in the coming weeks.
