empty
05.05.2025 08:49 AM
The Market Doesn't Dare to Go Against the Crowd

"Dance while the music plays." The S&P 500 has just completed a 9-day rally—the longest since 2024—driven by a strong U.S. labor market report and upbeat earnings from tech giants. Among the 31 previous rallies of similar length, this one in May was the most profitable. The broad market index climbed 10%, fully recovering losses incurred since America's Liberation Day.

S&P 500 9-day rally performance

This image is no longer relevant

Why is the S&P 500 rising when major players, heeding recession warnings from Goldman Sachs and Apollo Global Management (estimating a 45% and 90% chance of recession in the next 12 months), remain on the sidelines? And how long can this continue?

The answer is clear: the crowd is the main engine behind the U.S. stock market rally. But trying to go against the crowd is like attempting to stop a speeding tram with your bare hands.

Even the smallest good news is seen as a reason to buy. Whether it's a headline that Washington is seeking a way to begin talks with Beijing, news that China has unilaterally lifted a quarter of its tariffs on U.S. goods, or Donald Trump suggesting that the 145% tariffs might not be that high in the end—any of these spark bullish sentiment. Add pleasant surprises from the U.S. labor market and big tech earnings, and the picture becomes decisively bullish. Is it really surprising, then, that the S&P 500 has staged a 9-day rally?

The dynamics of the winning marches of the S&P 500

This image is no longer relevant

However, one shouldn't be overly enthusiastic about the jobs data.

Layoffs of government employees by Elon Musk's Department of Efficiency won't be fully felt until September since many of the dismissed are still counted as employed due to receiving unemployment benefits. The front-loading of U.S. imports has fueled hiring in service sectors, while immigrant deportations have artificially lowered unemployment by shrinking the labor force. The U.S. labor market is a colossus with feet of clay—and the S&P 500 will soon realize it.

The same goes for the U.S.-China trade war. Donald Trump wants revenue from tariffs and increased purchases of American goods. On the other hand, Xi Jinping demands a unilateral lifting of draconian import tariffs. The goals of both sides are fundamentally opposed, meaning the negotiations will be tough.

This image is no longer relevant

The tech sector's earnings strength was interpreted as a signal of U.S. companies' resilience to the tariff environment.

But the worst is yet to come. It takes time to fully grasp how supply chain disruptions impact the economy and corporate profits—and the bears still have that time on their side.

Technically, on the daily chart, the S&P 500's 1-2-3 pattern led to a breakout above key moving averages.

This signals bullish strength and raises the likelihood of a resumed uptrend. The red line at 5695 is critical. If buyers fail to settle there, it will trigger profit-taking from longs built up from the 5400 level and possibly a reversal. Conversely, a successful breakout above this resistance will justify building up long positions further.

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

What to Pay Attention to on June 11? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Wednesday. Therefore, any sharp reversal or strengthening of movement may only occur at the start of the U.S. trading session, when

Paolo Greco 06:10 2025-06-11 UTC+2

GBP/USD Overview – June 11. What Will Inflation Influence?

The GBP/USD currency pair fell sharply in the first half of Tuesday but retraced back to its original position in the second half. Traders may have assumed in the morning

Paolo Greco 03:31 2025-06-11 UTC+2

EUR/USD Overview – June 11: Even News About Negotiations Doesn't Help the Dollar

The EUR/USD currency pair continued trading sluggishly on Tuesday, maintaining an upward bias. The macroeconomic backdrop has been absent for two days in a row, but there have been some

Paolo Greco 03:31 2025-06-11 UTC+2

Japan Hopes for a Positive Outcome in Trade Negotiations—Otherwise, Recession and Rising Inflation Loom

The revised estimate of Japan's Q1 GDP showed that the economy contracted less than previously estimated, with consumption figures also revised upward. GDP declined by 0.2% year-over-year instead

Kuvat Raharjo 00:21 2025-06-11 UTC+2

GBP/USD: Labor Market Cools Down, But the Pound Holds Its Ground

The UK labor market data published on Tuesday turned out to be unfavorable for the pound. However, the GBP/USD pair is not rushing to dive downward, as the overall weakness

Irina Manzenko 00:21 2025-06-11 UTC+2

The Dollar Is Doomed, Though It Doesn't Know It Yet

In war, all methods are justified. U.S.–China trade negotiations are ongoing in London, and everything is being utilized—from education to rocket engines. Washington is prepared to make concessions, including lifting

Marek Petkovich 00:21 2025-06-11 UTC+2

The Dollar Stabilized, but It Won't Last Long

The latest CFTC report indicates that the sell-off of the U.S. dollar has either ended or is close to ending. The net short position against major currencies decreased by $1.094

Kuvat Raharjo 18:45 2025-06-10 UTC+2

No News Is Already Good News

Trade negotiations between the United States and China are set to continue for a second day, as both sides aim to ease tensions surrounding technology exports and rare earth elements

Jakub Novak 11:19 2025-06-10 UTC+2

EUR/USD. Analysis and Forecast

Today, the EUR/USD pair is under pressure, having failed to consolidate above the 1.1435 level and showing intraday declines toward the psychological level of 1.1400 and below, amid U.S. dollar

Irina Yanina 10:45 2025-06-10 UTC+2

Markets Hope for a Breakthrough in U.S.-China Trade Talks (Gold and GBP/USD May Continue Declining)

Markets have virtually come to a standstill in anticipation of the outcome of the trade negotiations between representatives of China and the United States. So far, there have been

Pati Gani 10:44 2025-06-10 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.