The S&P 500 Just Made a Striking Move That Signals Something Big Ahead.

Key Points

• The S&P 500 slipped earlier in the year but finished the first half with a gain.

• A recent move offers us some evidence about what might happen in the second half.

• These 10 stocks could mint the next wave of millionaires ›

The S&P 500 index (SNPINDEX: ^GSPC) brought investors reason to scowl and reason to cheer in the first half of the year. The index slid earlier in the half, and even temporarily reached into a bear market, amid concerns that President Trump's import tariff plan would push prices higher and weigh on the economy.

Then, weeks later, trade talks and initial agreements prompted optimism that tariffs wouldn't be as high as originally expected -- and that lifted investors' biggest fears. As a result, the S&P 500 went on to soar, finishing the first half up 5.5% and recently reaching a new record. And in recent days, the index went even a step further, making a striking move that signals one particular thing, according to history. Let's zoom in and find out what may be next.

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Image source: Getty Images.

Tech stocks are soaring

As mentioned, recent weeks have been bright for the benchmark and for investors. The bull market is going strong, and growth stocks that fell earlier in the year now are charging back and leading the indexes higher. For example, tech market bellwether Nvidia, which lost nearly 30% in the first three months of the year, finished the first half with a 17% gain. And many other tech stocks followed, rebounding from lows and going on to deliver positive returns.

Investors today are optimistic that trade deals will be fair, with reasonable tariff levels, and won't disrupt economic growth. This is fantastic news for all stocks, but it's particularly good news for growth players that rely on a strong economy to expand and develop. So, it's not surprising that they've roared higher in recent times.

Now, let's consider the move the S&P 500 made a few days ago. The index's 50-day moving average crossed above the 200-day moving average, forming what's known as a "golden cross" in technical analysis. When this happens -- a short-term moving average crossing over a long term one – it's considered a bullish sign for the market, suggesting more gains may be ahead.

^SPX data by YCharts

What's happened 80% of the time

To add some historical evidence to this, I looked to data from Carson Investment Research, showing that since 1950, the index has delivered a higher return 80% of the time in the year to follow a golden cross -- and it's generated a 13% median return.

Data source: Carson Investment Research.

So, if history is right, the S&P 500 could be on track for something big -- posting double-digit returns this year. This would be the index's third straight year of double-digit gains, after increasing 23% in 2024 and 24% in 2023.

Of course, it's important to keep in mind a couple of things. Technical analysis focuses on market data to identify trends and then make predictions based on those trends. Sometimes this results in an accurate prediction, but that's not always the case.

The weakness of this method is it ignores fundamentals, such as corporate earnings or economic and political news. These and other concrete factors could greatly impact stock movement or the movement of an index. On top of this, general historical trends also don't always repeat themselves. They share the same weakness with technical analysis: They don't include fundamentals or news that may offer investors a reason to buy or sell.

Why look at technical analysis?

So now you may wonder: Why even look at technical analysis or history in general? That's because they do offer us some clues as to what's possible if other factors don't interfere. So, they might be used as one element to add to others. For example, today, a look at the golden cross and at the current economic and earnings situation could help us decide whether we should take a bullish or bearish view of the market in the months to come -- however, it's important to keep in mind that any new element could change the picture.

That said, all of the elements we have as of now offer us reason to be optimistic about the S&P 500 this year, and the best news of all is this: Regardless of the index's short-term performance, it's always gone on to advance over time, and that means it's a great idea to bet on top quality stocks and hold on for the long term.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.