Markets have begun to stabilize as April comes into focus. But history shows it may not last long.

The S&P 500's (^GSPC) rally earlier this week allowed the major index to reclaim its widely watched 200-day moving average. In its simplest form, the 200-day moving average is a measure of market sentiment over a long period of time.

The index had been trading above its 200-day moving average for 336 straight sessions, according to new data from Sundial Capital Research. But concerns around tariffs this month sent the index below the key indicator for 10 consecutive sessions.

Going back to 1946, Sundial Capital Research found 11 times when the S&P 500 went more than 200 sessions above its 200-day moving average and then dropped below it for between five and 15 sessions before reclaiming it. Three months after this happened, the mean return was -2.9%. Six months later, it was -1.1%. And one year later, it was -1.1%.

"Even if we loosen the parameters in the study above, the S&P's returns in the months ahead tended to be weaker than average," Sundial Capital Research's strategist Jason Goepfert said. "This may be surprising since popping back above the 200-day average is supposed to be a positive development. It is, but we should be on the lookout for a relatively quick failure. If we see that in the days ahead, it will raise questions about the sustainability of some of the prior studies." 

The reasons the index fell below the 200-day are numerous.

picture alliance via Getty Images

For one, economic data has begun to soften.

Spending at US retailers last month was much weaker than expected, per the latest retail sales report. This is on top of weakness in consumer confidence data and various Fed activity surveys, as households digest a flurry of Trump tariff headlines.

Read more: What Trump's tariffs mean for the economy and your wallet

In the meantime, big companies Delta (DAL), FedEx (FDX), and Nike (NKE) have warned about near-term demand trends this month.

And now, Wall Street has started to cut their S&P 500 price targets.

While data in the past few days has painted a less ugly picture of the economy (see PMI, new home sales, and durable goods order data), which has led to a rebound in the S&P 500, the calm waters could prove fleeting.

"Ambiguity is the No. 1 enemy of a market," former director of the National Economic Council and current IBM vice chair Gary Cohn said on the Opening Bid podcast. "When a company creates ambiguity in their earnings profile, in their growth profile, in their business model, the market will punish that stock. When politicians, legislators create ambiguity in the way that taxes are going to work, the way that capital gains are going to work, the way that they're going impose tariffs, they create ambiguity to a market and the market as a whole reprices."

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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