April is over—and what a chaotic, wild month it was. April 2nd, “Liberation Day,” kicked off the fastest stock market drop we’ve seen since Covid, driving the S&P 500 into a technical bear market. Today’s chart shows exactly why “technical bear market” is about the worst sell signal out there—we’re now up 16% since that bear market happened.

That sharp drop followed by an even sharper rally has created one of the largest hammer-like candles I’ve ever seen. I did an entire study on that candle last week (linked here), which reinforced my thesis that even if this market does move higher over the coming weeks, we’ll likely get a fairly substantial retest before seeing new all-time highs—if that’s even the path we’re headed down. It’s still very possible (even if it doesn’t feel like it) for the market to make new lows and take out April’s bottom.

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We also saw a Death Cross on the QQQ on April 14th. I joked that day that the market is now destined to go to zero—but in reality, it’s an interesting indicator, even if it is overhyped and over-discussed. It’s not a tool to time market tops or bottoms, but it can help gauge big-picture direction. Today, we’re going to compare the 2022 Death Cross with today’s setup and look for key similarities and differences.

What stands out to me is how this analysis aligns with my Elliott Wave counts, the Brexit Bars overlay that Jerremy Newsome is tracking, and the hammer study I did last week. With multiple studies pointing in the same direction, I have to lean into this and let it guide my trading plan over the next few months.

To recap:

• The Elliott Wave analysis suggests April’s price action is a B-wave in a larger correction. There are always alternate counts with Elliott Wave, but the choppy, overlapping nature of the rally off the lows supports this view. This would mean that we should push down below the April low at least slightly in the coming months.

• The Brexit Bars overlay shows a push into the long-term daily moving averages, followed by a full retracement back to April’s lows—briefly breaking them—before rallying to new highs.

• The Hammer Study shows it’s highly probable April’s hammer candle gets a 50% retest at minimum. A full retest—with a wick below the April low—is also common with this setup. If we close a monthly candle below April’s low, that would indicate more pain ahead and a deeper bear market than anyone is expecting right now.

Now, on to our Death Cross analysis. If today’s price action follows the 2022 Death Cross setup, what will that mean? In 2022, the Death Cross came after a 20% drop. This time, it came after a 26% drop. Pretty similar. In 2022, we got a 9% dip right when the Death Cross happened, followed by a face-melting 17% rally into the 200-day SMA. So far this time, we’ve seen about an 8% dip when the cross happened and a 14% rally—or 21% off the lows.

QQQ 2022

In 2022, we pushed just above the prior pivot at $370, trapping the bulls and luring people into thinking the bull market was back. If that pattern repeats, today’s pivot would be around $493—lining up with the 200-day SMA and the key resistance level from 2022 that we haven’t yet hit in this bounce.

That puts a topping zone around $495–$500. It's worth noting that the bull market support trendline, which held for two years, also lands around $500 and should act as additional resistance.

Once we get there, I expect at least a 10% drop into the 100-week SMA. If we drop into that level, fill the open gaps, and start moving sideways in a corrective pattern, it’s very possible we base out and push to new all-time highs this summer.

But if we slice through the 100-week SMA, gap down hard, and start taking out major support levels, I’ll be shifting focus to the scenario where we break below April’s low and don’t find a real bottom until deeper downside is explored.

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