Wondering If The Market Rebound Is Underway? These 10 Indicators Can Help!

Just three weeks ago, the S&P 500, the benchmark index for the U.S. stock market, even hit a record high. However, as individual and institutional investors in the U.S. stock market now reassess their portfolios, they find a vastly different landscape. 

On Tuesday, the S&P 500 officially entered the so-called correction zone—a cumulative drop of 10% from its peak in less than a month. Although the index rebounded slightly at yesterday's close, temporarily exiting the correction zone, the overall U.S. stock market remains clouded, and its future trajectory is fraught with uncertainty. A historically accurate 10-point checklist of indicators may help investors predict future market trends.

Since Trump's return to the U.S. presidency for a second term, his recent series of tariff policies have severely dampened U.S. business and consumer confidence, making global institutional and individual investors increasingly cautious about the U.S. market. Since February, when the new Trump administration focused heavily on imposing tariffs, an increasing amount of global capital has fled the U.S. stock market.

The market had eagerly anticipated the so-called Trump put to significantly boost the U.S. stock market, which has been underperforming this year. However, Trump and U.S. Treasury Secretary Besent recently did not express any support or reassurance for the U.S. stock market. Instead, they emphasized that as the U.S. economy moves away from reliance on government spending, it may inevitably go through a detox period.

Trump himself did not directly deny the possibility of the U.S. falling into a recession, stating that the U.S. economy would experience a transition period and that tariffs would inevitably bring disturbances. He emphasized that tariffs are meant to make the U.S. prosperous again and to Make America Great Again. 

On Tuesday, Trump once again downplayed concerns about a U.S. economic recession, predicting that the U.S. would not fall into a downturn. Speaking at the White House, he said, I don't see a recession at all. I think this country is going to prosper. Trump added, You can't always look at the stock market; it goes up, and it goes down. But you know what? We have to rebuild our country.

Market Outlook Analysis: A Historically Accurate 10-Point Checklist to Guide the S&P 500's Future Trajectory

How can the future trajectory of the U.S. stock market be predicted? How to accurately implement the buy the dip strategy? Below is a 10-point checklist compiled by investment institutions based on Wall Street analyst reports. Investors can use this checklist to track future market movements.

If more negative factors or uncertain factors turn into positive factors, the market will quickly enter a major rebound wave. Historical data shows that the comprehensive guidance provided by these indicators has a very high accuracy rate in predicting bull and bear market trends. 

The key factors include economic growth and recession risk being negative, unpredictable trade policies being negative, government spending cuts being negative, interest rate cut expectations being uncertain, inflation decline being uncertain, a loose regulatory environment being uncertain, tax cuts being uncertain, corporate earnings and investment being positive, robust consumer spending being positive, and a low unemployment rate being positive.

Conversely, if uncertain factors continue to dominate the market, the overall volatility of the U.S. stock market, and even global markets, may intensify. If more negative factors persist, the market could face even greater pain—meaning that additional negative factors on this checklist could lead to further market sell-offs.

Investors should closely monitor the latest market news and economic data, such as the U.S. Consumer Price Index (CPI) report released at 8:30 AM ET on Wednesday. Additionally, investors should note that this 10-point checklist itself contains some seemingly contradictory paradoxical factors, such as government spending. In the short term, continued increases in government spending are positive for business and GDP growth; however, from a long-term investment perspective, this could exacerbate the U.S. government's unsustainable debt burden, potentially leading to a sovereign debt default—although the latter is difficult to measure in the short term, it may be equally important.

It Must Be Admitted: Trump's Tariff Policies Have a Very Negative Short-Term Impact

The Trump administration is attempting to implement long-term structural changes in the U.S. economy, with tariffs aimed at bringing manufacturing back to the U.S. being a core part of this transformation. Although the success of the Trump administration's reform goals remains highly controversial, there is no doubt that this has severely damaged the animal spirits that have supported the market since November last year, leading to capital flight from U.S. stocks and a shift toward Chinese and European markets with valuation and fundamental advantages.

In-Depth Analysis: What Does the 10-Point Checklist Mean?

The so-called 10-point checklist compiled by institutions based on Wall Street analyst reports is essentially a set of analytical tools to help investors objectively assess the current market environment and trend changes. The indicators in the checklist cover macroeconomic fundamentals (such as economic growth and unemployment), policy environment (trade policies, government spending, tax and regulatory policies), monetary policy (interest rates, inflation), and corporate performance (profitability, investment, and consumer spending).

Through this checklist, investors can clearly judge the weight of positive and negative factors currently facing the market, thereby more accurately predicting future market trends. Some of these factors may have short-term impacts, while others are more long-term in nature. Investors need to weigh the relationship between short-term volatility and long-term structural changes to develop more effective investment strategies.

In summary, this 10-point checklist serves as a barometer for predicting whether the market will lean bullish or bearish, helping investors clarify whether the market will continue to decline or quickly regain upward momentum.

On Tuesday, analysts from Wall Street giant goldman sachs, including David J. Kostin and Ben Snider, released a report lowering their year-end target for the S&P 500 from 6,500 to 6,200 points. However, the Goldman Sachs team stated that if U.S. economic and earnings growth continues, historical data shows that corrections in the S&P 500 are usually good opportunities to buy the dip. Although the target has been lowered, the Goldman Sachs team expects the S&P 500 to still have over 10% upside for the remainder of the year.

Over the past three weeks, the S&P 500 has fallen more than 10% from its all-time high, with more than half of the decline coming from the Magnificent Seven (including nvidia, microsoft, and Tesla), which collectively plunged 15%. Last year, the Magnificent Seven contributed 25% of the S&P 500's total returns.