Stock Market V-Bottom: History Is Repeating and Most Investors May Still Be on the Sidelines

This is going to be another short video. More thoughts on V-bottoms in stocks which our team has discussed for weeks post the early April, Washington DC induced, Tariff tantrum, hedge fund delivering and blowup and subsequent rally that has mystified many bears and left many traders in the dust.

We’ve discussed for weeks in our videos, looking back April 7^th “was what we thought was “The Low” for the overall S&P500 index and USA stocks most likely for the rest of 2025, ex the unforecastable Black swan event. Much to the dismay of those calling for crashes, lower lows, retests of the lows, trading ranges lower, or worse yet those blown out on margin at the lows, or investors who panicked and went to cash late in the move down.  Sorry retired baby boomer hedge fund billionaires Ray Dalio and PTJ, I continue to think you are wrong at these turns, much as you have been in the last 10 years.

Ex the GFC in 2007-08 and the popping of the speculative Dot.com bubble frenzy in 2000-01, which did proceed longer and deep recessions. History says enough damage had been done and we have V-bottomed in a near exact similar fashion as the V-bottoms the last 20 to 30 years.  And investors, the really good news here?  This one looks to have happened WITHOUIT Federal Reserve intervention and interest rate cutting.

The Zweig Breadth thrust on April 24^th, created the first of what many chartists call a bullish “Island Reversal” pattern. The in progress China tariff “deal over the weekend of May 9^th, almost exactly 1-month after the April low and 2 months to the day from when the S&P 500 first broke its 200 day MVA on Friday March 7^th created a second island reversal higher leaving those longing for lower prices to get back in desperate to buy or cover their shorts. We stalled and faded back from about 5965 for roughly a week back to the 200 day, and as of this writing on Memorial Day. Monday, it looks likely to gap higher tomorrow on Tuesday when the markets reopen.

We did a video a few weeks ago titled, V-Bottoms, no one gets in.  So far, so good.  Our team didn’t think the 200-day MVA would be much resistance for the markets, unlike a hoard of CNBC commentators I heard. On Monday the 12^th, we blew right back through the 200-day MVA which many had predicted would stop us.

The S&P 500 has been supported by improving breadth. No, it’s not just large cap tech stocks working in the market. The percentage of stocks in the S&P 500 rising above the 50d SMA and 200d SMA, the percent of stocks in the S&P 500 making new 52-wk without new 52-wk lows and the percent of stocks above their 20 day MVA has exploded as upside momentum improves with trend.

Investors, history, is on the side of the bulls.  The strategists who have been calling for a retest have now been wrong for at least 800 points.  We’ve given you the data on Zweig Breadth thrusts, investors sentiment data, and vix spikes and retracements in the last month.  The proof of truth is on the side of bulls not bears as price is truth.

One can rationalize why markets have V-bottomed since early April on walking back of tariff extremism, better jobs, and wage inflation data, but viewers who know me know I like real time market data.  The bond market data since early April was saying real growth was “ok” and inflation peaked early in April, not the stagflationary doom biased call many have suggested.

I’ll leave you with an update on how the charts look vs a similar period that was mid Dot/com not peak Dot.com.  I feel compelled to keep showing this because Charles and I listened to dozens of technology conference calls the last 3 weeks that were positive of the continued AI buildout growth for the next 12-18 months and most the stories I read in financial media are of the pending AI collapse which isn’t happening yet. Secondly, I haven’t been able to find anyone who believes this analogy or will spend any time researching it.

The market has behaved almost exactly as it has the last 15 years during event induced selloffs that reached bear market levels without the likely hood of an earnings or economic recession like we got in 2022.  What’s that? We spent EXACTLY 2 months to the day, breaking the 200-day MVA and then regaining it.  Count the days. Then go back to our previous event driven V-bottoms.

After regaining the 200-day MVA rapidly, the markets stalled for 5-10 trading days, and sold off post option expiration into vol expiration, pulling back 2-3%. Investors, 2-3% is untradeable unless you are day trading and GREAT.  Post Memorial weekend, we started higher once again.

Many of you are probably not wanting to go do the research on V-bottoms so our team did it for you and presented it the last 4-5 weeks.  If we continue on the “normal-V bottom recovery path” what would that look like?  Well from here, quite frustrating to both bears, who are wanting a retest or worse, and perma-bulls who want a parabolic move higher.

Historically, the pattern would look like this.  The S&P 500 regains the level where it first broke the 10-week SMA which is about the same as the 50-day Arithmetic MVA almost exactly 3 months from when it first broke those levels.  Lets call that S&P 500 6000-6025 the month end May to let’s say June 6^th.  It would then take another month, call it July 3-8 to fight through this level and base out near 6100+, and then it would take another month, call it August 4-8 to reach a new ATH in the cash S&P500 call it 6175-6200.   We’ve penciled those levels in on the S&P500 chart for those to see.

So, from here, let’s call it what it would be, a lurch and grind higher, about 1-1.5% per month, about 100 points per month into an August summer top.  Which is a very normal seasonal time for the markets to peak.

After that, we would expect a normal summer pull back in the markets, but Investors you most likely won’t see those low levels of April again for quite some time if at all this year.  Many institutions got too bearish near the early April lows and “de-risked” and are already way behind the performance curve in the 2^nd quarter.  If this plays out as normal, they will be even farther behind the indexes and benchmarks by August, so any summer sell off into early October would likely be a buying opportunity for a yearend rally and new ATH’s in 2026.  Hence why our team has stuck with our 2025-year end target of 6600 even as stocks sold off into April, and most strategists slashed their targets from over this number to the low 5000’s and are now raising them once again.

Does that mean you shouldn’t add to stocks particularly if you are younger and in saving and accumulation mode?  No, rarely can you pick the absolute level in both price and time, on both the buy side, sell side, and buy side once again, particularly in growth stocks.

Regardless of the path for the economy and financial markets in the next few months, the investment team at OHFG will be here manning the ship and adjusting our models and long/short, hedged equity fund where we can.

Until next week, have a blessed weekend and know that the OHFG team is doing what we can to plan for you and your family’s future regardless of what stage you are at in your career or retirement.

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