Charts Are Warning About Stock Market and Economy—What's Next to Watch?

Stocks are on track for their worst month since October 2022, as Trump's tariff uncertainty and weak economic data dent investor confidence, driving liquidity into risk-averse assets. Now, technical indicators are flashing warnings, with Trump's April 2 Liberation Day set to be a critical moment for market direction. But that's not the only concern—here's what the charts are signaling and the key levels to watch.

So far, the S&P 500 has tumbled 6.27% this month, marking the worst March performance since 2020, when panic selling erupted due to COVID—also under Trump's administration. Although investors attempted to recover from early March's sell-off, last week's sudden drop hints at a dead-cat bounce, which is now on track to resume the downtrend. If the index breaks below the 5505 support level, further bearish technicals will be confirmed.

The monthly chart is even more severe. The S&P 500's MA(3) is crossing below MA(5,10), signaling a potential death cross. Over the past five years, we've seen three death crosses—2023, 2022, and 2020.

October 2023: MA(3) briefly dipped below MA(7) but failed to break MA(10), leading to a false death cross. The market soon rebounded and surged to new highs.

March 2022: MA(3) formally broke below MA(7) and MA(10), leading to a 16% downside over the next three months before a new bull phase began.

February 2020: The S&P 500 tested MA(7,10) before breaking below—triggering a 13% crash in a month. The market only recovered once MA(3) turned back above MA(7,10).

That's where we stand now. MA(3,7,10) is converging, and any aggressive move by Trump or increased pessimism could easily push stocks into another bearish phase.

Tariffs Aren't the Only Threat—Stagflation Risks Loom

Trump's tariff war isn't the only weapon threatening stocks—disappointing economic data is also raising fears of stagflation.

For example, core PCE came in at 0.4% m/m and 2.8% y/y, above expectations of 0.3% and 2.7%, putting pressure on the Fed's rate path. Importantly, February's inflation report only reflected some of Trump's tariffs on China—with more coming in March and April.

The Fed's March dot plot suggested two cuts this year, but markets are pricing in three. The disagreement stems from whether Trump's tariffs will slow the economy faster than expected, forcing the Fed to act. However, while rate cuts could support growth, they won't fix inflation—especially if tariffs push up import prices.

That's why investors are piling into safe-haven assets—but not just Treasuries. They want inflation hedges, too. Enter gold.

Gold has been breaking records all year, with gold futures now above $3,154/oz, on track for the best quarter since 1986. The surge started when Trump announced the first 10% tariff on China in January and accelerated as he expanded tariffs on Mexico and Canada.

Meanwhile, U.S. 10-year Treasury yields are declining, signaling rate cut expectations, but gold's rise is outpacing bonds. Investors don't believe rate cuts alone can fix the economy—they fear stagflation.

Markets at a Crossroads: What to Watch Next

With the S&P 500 at a critical level and uncertainty rising, here are the key risks ahead:

Friday's Non-Farm Payrolls – Massive layoffs, including DOGE's, could start reflecting in job reports, signaling a slowing economy.

Q1 Earnings (April) – Investors shouldn't count on earnings as a savior. Tariff uncertainty, Microsoft scaling back AI data centers, and cautious corporate spending could push Big Tech toward weaker results and guidance.

Uncertainty Itself – The Trump administration has no clear plan beyond tariffs. Without clarity on economic policy, investors may keep fleeing to safe-haven assets, draining liquidity and triggering a deeper sell-off.

The S&P 500 is facing a crucial test, and markets are bracing for the impact of Trump's economic war. Big players are already fleeing to Treasuries and gold, preparing for a potential stagflation shock. But beyond the obvious risks, hidden dangers may still emerge, bringing even more trouble for the stock market.