Wall Street staged a relief rally on Friday to make a bad week look somewhat respectable. Next week will show if the market has reached a turning point, or if this bounce was just a blip in a larger downturn. There’s no clear answer, as bulls and bears both have plenty of data points to make their case. On the negative side, the S & P 500 is still below its 200-day moving average even after Friday’s rebound, and that closely watched technical indicator could portend a breakdown for the market. Also on the technical side, Lawrence G. McMillan of OptionStrategist.com pointed out on social media that the put-call ratio — essentially a measure of option trader sentiment — has not yet reversed its current upward trend, which would be a potential buy signal. The Dow Jones Transportation Average , which is sometimes viewed as a leading indicator for the economy, is down about 13% since the close of Feb. 18 — the day of a recent peak for the index. .DJT 1M mountain The Dow Jones Transportation Average has declined more than the S & P 500 since mid-February. On the positive side of the ledger, there are some reasons to think the selling of the past week has been exhausted. Bank of America’s trading desk reported its lowest day of retail investor volume for 2025 on Thursday, a sign that that those investors may be tapped out. And gold hit a record high and traded above $3,000 , a psychological breakthrough for an old-school defensive play. One reason often cited for the stock market’s decline is concerns about slowing economic growth in the U.S., but Luca Rainero, head of data intelligence at JPMorgan’s data assets and alpha group, said in a note that equity markets have “overshot” the recession expectation shown in credit markets. As bad as the last few weeks have been for stock traders, a 10% drawdown for the S & P 500 is hardly unusual. But what comes next is harder to pinpoint. “Corrections are unnerving in the moment, though they are not unusual, and often act as a pressure release valve for overheated markets,” Mark Hackett, chief market strategist Nationwide, said in a statement. “This will not be the last correction, pullback, or market scare that the bulls will have to face, and yes, an element of caution is warranted.”
Relief rally brings optimism to market, but signs point to more selling ahead
