The S&P Will End Lower On March 26th

Steve Spalding
Predictions and Prescriptions
2 min readMar 25, 2020

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Photo by Mark Basarab on Unsplash

The market was up two days in a row, though by the end things were looking a bit hairy.

Still, this is the first time in several weeks we’ve managed to mount even a half-hearted multi-day rally, and for it to come immediately after yesterday’s stimulus bonanza says a lot about how much water $2 Trillion can carry.

For those in the business of calling bottoms though, I probably wouldn’t get ahead of myself. While breaking our endless losing streak is a sign that things might be changing, there is still a ton of uncertainty out there in the markets:

  • When will quarantine end?
  • When will Coronavirus cases peak?
  • How quickly will retail demand return once this is all over?
  • How many businesses will collapse in the interim?
  • How bad was the damage done to supply chains?
  • How bad is the damage to global consumers?

Without answers to at least some of these questions, it seems unlikely that we can mount a sustained movement. More importantly, until the stimulus bill becomes law, there is always the chance that it might collapse under it’s own ponderous weight before it passes the finish line.

Photo by Muukii on Unsplash

While I wouldn’t be opening massive short positions for the moment, I also wouldn’t go all in. The VIX is still trading above 50, and sentiment is pretty fragile. One small kick in the shins, and we are likely to see a rout.

Remember, the good people over at Goldman still believe that the market could fall as low as 2,000 before all is said and done. Don’t let optimism get in the way of smart positioning.

Photo by yuichun Leung on Unsplash

Prescriptions

I’m mostly long the market, but still holding some cash in reserve. Apple is my new favorite stock to buy puts against near its peak, but to be honest the trade is getting harder to pull off than it used to be.

Keep nibbling at names that you like. Things are still on deep discount, and there have been far worse times to start building a position.

Strength of Prediction

My initial odds are 65% that the S&P will end lower on March 26th. I plan to revisit this prediction again in a couple days time.

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Steve Spalding
Predictions and Prescriptions

Writer, builder of internet things, prone to wanderlust and pontificating. Collects interesting people. Enjoys: science, fiction, finance, culture, ze future.