empty
28.04.2025 07:00 PM
The Market Has Outplayed the Professionals

"Follow the smart money" — this classic principle of technical analysis suggests it's safer to side with professionals rather than the crowd. However, in 2025, such an approach would have led to capital losses. Hedge funds, traditionally seen as smart money, have sold $1 trillion more in U.S. equities than they have purchased since the beginning of the year. Retail investors, by contrast, largely stuck to a "buy and hold" strategy — and as April draws to a close, it's clear this approach has paid off.

After Donald Trump's election victory, the S&P 500 posted the strongest post-election rally in history, driven by hopes that the 47th U.S. president would turbocharge an already booming economy. In reality, Trump's aggressive tariff policies have raised fears of an economic slowdown. Bloomberg now forecasts U.S. GDP growth to decelerate from 2% to 1.4% in 2025 and has raised the probability of a recession within the next 12 months from 30% to 45%.

S&P 500 P/E Ratio Dynamics

This image is no longer relevant

An economic slowdown would weigh heavily on corporate earnings, making investors increasingly cautious about investing in the S&P 500. American equities remain relatively expensive, and capital is steadily flowing out of the U.S. and into Europe. According to Allianz, the $28 trillion U.S. equity market is too large to be abandoned overnight. Nevertheless, even minor selling pressure could trigger significant market corrections — as seen after Independence Day earlier this year.

Despite Trump's hopes that the S&P 500 rally would continue after the election, the reality of his inauguration and policy actions made the first 100 days of his presidency one of the worst periods for the index on record. Only during the crises of 1937, 1941, and 1973–1974 were there more severe declines — and in those cases, the market remained under pressure until the year's end.

S&P 500 Performance After Inauguration

This image is no longer relevant

By late April, the "crowd" had seized the initiative. The S&P 500 rebounded, coming within 3% of the levels seen on America's Liberation Day. Horizon Investments notes that sustained momentum will depend on positive developments in U.S. trade negotiations with other countries.

This image is no longer relevant

Markets are now closely watching upcoming releases, particularly U.S. GDP data for the first quarter and April's employment report, to assess the extent of the economic slowdown.

Technical Outlook:

The S&P 500 continues to form a 1-2-3 reversal pattern on the daily chart, signaling a potential exhaustion of the corrective phase. Long positions initiated around the 5400 level should be maintained, with profit targets and potential reversals considered around 5625 and 5695. Failure of the bulls to hold above 5500 would signal underlying weakness and could trigger renewed selling pressure.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The dollar cannot find a reason to strengthen

The CFTC report showed that expectations for a reversal in the dollar have not materialized. After three weeks of relative stability, during which the total short position

Kuvat Raharjo 19:16 2025-06-03 UTC+2

The Pound Rises Against All Odds

The manufacturing PMI in May came in above expectations, but that was where all the positivity ended — 46.6 points, still below the expansion zone, and there's no talk

Kuvat Raharjo 19:09 2025-06-03 UTC+2

USD/JPY. Analysis and Forecast

The USD/JPY pair is showing mixed dynamics: despite the general recovery of the US dollar, the Japanese yen is under pressure from intraday sellers amid a combination of negative factors

Irina Yanina 18:27 2025-06-03 UTC+2

GBP/USD. Analysis and Forecast

The GBP/USD pair is attracting sellers today, pulling back from yesterday's high. This pullback is associated with a moderate strengthening of the US dollar, which is exerting pressure

Irina Yanina 18:24 2025-06-03 UTC+2

Traders Didn't Believe the Japanese Regulator

The Japanese yen lost some ground against the US dollar after Bank of Japan Governor Kazuo Ueda hinted today that the central bank may continue to slow the pace

Jakub Novak 11:16 2025-06-03 UTC+2

Market startles monster

Over time, we get used to everything — the good and the bad. Investors have finally come to terms with the fact that they will have to build businesses under

Marek Petkovich 10:44 2025-06-03 UTC+2

Deteriorating U.S. Economic Conditions Bring Fed Rate Cuts Closer (Potential for Continued Decline in #USDX and EUR/JPY Pair)

Although the market has largely stopped reacting to incoming economic data—especially from the U.S.—and is more focused on the geopolitical and economic moves of Donald Trump, who is steering

Pati Gani 09:52 2025-06-03 UTC+2

Everything Is Still Working Against the U.S. Dollar

Despite U.S. President Donald Trump's efforts to secure more trade agreements, the U.S. dollar continues to decline sharply against several other assets as negotiations with China and Europe falter

Jakub Novak 09:09 2025-06-03 UTC+2

What to Pay Attention to on June 3? A Breakdown of Fundamental Events for Beginners

There are only two macroeconomic reports scheduled for Tuesday. Although the first report looks significant on its own and the second one is directly related to the U.S. labor market

Paolo Greco 06:53 2025-06-03 UTC+2

GBP/USD Overview – June 3: Trump Deals Another Slap to the Dollar

The GBP/USD currency pair surged upward again on Monday. Just as the British pound had started a correction and even consolidated below the moving average line, Trump once again announced

Paolo Greco 04:38 2025-06-03 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.