By: Rimi
Published on: Apr 01, 2025
The stock market’s recent rollercoaster ride has left investors gripping their seats, but a hidden bullish signal may finally offer hope. Amid the turbulence, technical analysts are buzzing about a potential “double bottom” pattern forming in the S&P 500—a historically reliable indicator that a downtrend is reversing. With the index rebounding sharply from key support levels, seasonally strong trends on the horizon, and trading volume signaling investor caution rather than panic, experts argue the worst of the sell-off may be over. Here’s why the chaos could soon give way to a bullish resurgence.
A double bottom is a chart pattern that signals a potential trend reversal from bearish to bullish. It occurs when a security’s price hits a low, rebounds, falls back to the same low (forming a “W” shape), and then rallies again. The second bounce confirms that buyers are stepping in at a specific price level, effectively establishing a floor. For traders, this pattern often marks the end of a downtrend and the beginning of a new upward trajectory.
The S&P 500’s recent price action fits this template perfectly. On March 13, 2025, the index plunged to a low of 5,500 before recovering. Fast-forward to April 1, and the S&P 500 once again tested the 5,500 level during intraday trading, only to stage a dramatic reversal. By the afternoon, it had erased a 1.7% loss and climbed into positive territory, closing at 5,586.
“This looks like the early stages of a double bottom,” says Craig Johnson, Chief Market Technician at Piper Sandler. “The fact that the S&P 500 found support at the same level twice in three weeks suggests sellers are exhausted and buyers are gaining control.”
Historical data adds weight to the bullish case. Since 1928, the S&P 500 has finished April in positive territory 65% of the time, with an average return of 1.6% for the month. But when April rallies, they tend to be explosive: in positive years, the index has surged an average of 4.1%.
“April is historically one of the strongest months for equities,” Johnson notes. “Combine that with the double bottom setup, and we could see a powerful rebound.”
This seasonal strength often stems from fresh capital inflows at the start of Q2, corporate earnings optimism, and tax-related portfolio adjustments. With inflation fears easing and the Federal Reserve hinting at rate cuts later in 2025, macroeconomic conditions may further support a bullish April.
Another critical factor is trading volume. Last week’s total exchange volume (NYSE, Nasdaq, and American Exchange) hit its lowest level since mid-January. For Johnson, this suggests the recent sell-off lacked conviction.
“Stocks are falling on their own weight, not because of aggressive selling,” he explains. “Low volume during declines often signals that investors are waiting on the sidelines rather than fleeing the market.”
This “volume divergence”—where prices drop but trading activity remains subdued—is typically a bullish sign. It implies that once uncertainty clears, sidelined cash could flood back into equities, propelling prices higher.
One major overhang for markets has been the looming April 2 deadline for the Biden administration to decide on extending tariffs against Chinese imports. Investors fear renewed trade tensions could disrupt supply chains and inflate costs, but Johnson believes the resolution of this event could remove a key uncertainty.
“The market hates ambiguity. Once the tariff decision is announced, regardless of the outcome, investors will have clarity to reposition,” he says.
If tariffs are extended, sectors like technology and industrials may face short-term pressure. However, a status quo or scaled-back approach could trigger relief buying. Either way, the event’s conclusion aligns with April’s bullish seasonality, potentially acting as a catalyst for the double bottom pattern to play out.
For traders, the double bottom’s confirmation requires a decisive breakout above the pattern’s “neckline”—the peak between the two lows. In the S&P 500’s case, this level sits near 5,650, roughly 1.2% above its April 1 close. A sustained move above this threshold would signal a bullish breakout, with technical analysts projecting a rally toward 5,800 (a 3.6% gain from current levels).
Investors should also monitor trading volume. A breakout accompanied by higher-than-average volume would validate the pattern’s strength, while low volume could indicate false optimism.
While the setup is compelling, risks remain:
Geopolitical Surprises: Escalating tensions in the Middle East or Ukraine could reignite volatility.
Earnings Disappointments: Q1 earnings season begins in mid-April. Weak results, especially in tech and energy, could derail the rally.
Fed Policy Missteps: Any hawkish shift in the Fed’s rate-cut timeline may spook markets.
The S&P 500’s double bottom pattern, coupled with April’s historical tailwinds and subdued selling pressure, suggests the market is at a pivotal juncture. While risks persist, the technical and seasonal stars are aligning for a potential rebound. As Craig Johnson puts it: “This looks like a tradeable low. Investors willing to stomach near-term volatility may find opportunities in beaten-down sectors.”
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