SPY recovers to record after March drawdown

The technical backdrop reinforces the shift. SPY’s 50-day moving average has climbed to 755.34, while the 200-day average sits at 708.78, leaving the fund well above both longer-term trend markers. But momentum looks less one-sided than the headline price implies: RSI readings in the mid-30s to high-30s signal that the latest advance has been powerful but not euphoric, and MACD remains positive even after cooling from the sharp rebound. In other words, the market has already squeezed a large part of the easy short exposure, but it has not yet reached the kind of overbought extreme that typically marks a mature top.

For investors, the lesson is that shorting broad equities after a large drawdown is a difficult carry trade. The seed framing — “picking up nickels on margin” — captures the asymmetry: limited upside from a successful hedge or bearish bet, but potentially large losses if the market snaps back. That is especially true in an index fund like SPY, where passive flows, systematic strategies and discretionary dip-buying can quickly overwhelm incremental selling. The rebound also punished cash-heavy or underinvested managers who waited for a cleaner entry point and were forced to chase the move higher.

The bigger narrative is that this is less a clean victory for bulls than a warning about positioning. When a market falls hard enough to flush leverage and then recovers aggressively, the next leg is often determined by whether fundamentals justify the bounce or whether the move was mostly mechanical. Bulls will argue that the ability to regain lost ground after such a deep slide shows underlying demand remains intact. Bears will say the rally leaves the index vulnerable if earnings, rates or macro data fail to improve. For now, SPY’s message is straightforward: margin-driven downside bets remain dangerous, and the market has already proven willing to punish them.