Author Topic: Will S&P 500 Retest Recent Low By End of April  (Read 39334 times)


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Will S&P 500 Retest Recent Low By End of April
« on: April 03, 2020, 08:44:01 PM »
Jeff Gundlach on Tuesday said he expected the S&P 500 to test and take out its recent 52 week low of 2,191. This is a high conviction idea for him (although he is not short stocks). The average S&P 500 closed today at 2,460 so this would be a decline of 11% from today's close. I was surprised watching the business shows today at how many 'analysts' were saying the same thing (I counted 5 or 6); they were all high conviction on this 'prediction'. They are saying that what we have seen the past 2 weeks is a classic bear market bounce. It seems like people are getting more bearish.

What is everyone on the board thinking? Please provide a short rationale for your vote.

My problem is I assume smart people know what is going on and it is factored into stock prices. What I have learned over the years is this is not often the case.

If the low is taken out how low could we go? If we have a bear market like 2008 a decline of 50% in the S&P 500 sounds reasonable = 1,700. This would be a decline of 31% from today's close of 2,460. Or have we seen the low for this bear market and we are on our way higher from here.
« Last Edit: April 03, 2020, 08:50:38 PM by Viking »


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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #1 on: April 03, 2020, 08:51:35 PM »
Everything in my short term trading tool box points to the same. The technicals certainly point to another plummet, ie futures limit down Sunday night type shit. All the leading corona names got smoked last half this week and are leading indicators for new market lows IMO.

I again contemplated more bearish moves, but outside of shorting a lot of Ford this week, held tight. If nothing else because of memories of all the friends who sold out entirely after the Lehman filing, and both looked and felt great for a quarter or two, but never got back in and missed the turn. Maybe itís my approach, but if you canít hold tight after 25% down for the market, and more like 40-50% down for many healthy names, then whatís the point?


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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #2 on: April 03, 2020, 09:11:30 PM »
I mostly agree with the short term bears. My reasoning is that since nobody really knows how bad fundamentals are going to get, the market will trade for a while purely based on emotions, technicals, historical stats, etc ó which all point to a further drop of say 30-50%.


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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #3 on: April 03, 2020, 09:31:14 PM »
I'm about 40% long and 60% short.
I think sometime this month will see 10% or greater. Maybe it will just be intraday and not close below low.
If we don't have a therapeutic by fall then very well could see greater than 50% from peak late summer as virus will get bad again in the fall. Can you imagine how people will react with another shutdown of the economy if we re open in late May to close again in the fall?


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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #4 on: April 03, 2020, 10:34:06 PM »
Just a point of reference.  The SP500 TR (that is including dividends)  dropped by 55% from the high of July'07 to Mar'09. The same drop would mean that SP500 would bottom at about 1520.   That is complete capitulation.  That is the absolute bottom in my view, although I don't know if this cycle will be so low. But I base my plans on this worse case.  In this worst case, I will have no money left add to long positions, except what I need to pay bills.


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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #5 on: April 04, 2020, 12:17:56 AM »
I voted "yes, low conviction". On the one hand, I also think that if "everybody" thinks the market will go down, this is priced in an it will not.  On the other hand, I was in the "the market is overpriced" camp, and a 20-30% drop would simply make it more reasonably priced to how the world looked in January. Another 20-30% drop to adjust for how the world looks today, including plenty of fear and almost literally blood in the streets, does not seem that unlikely to me.


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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #6 on: April 04, 2020, 05:02:56 AM »
Yes, was on the fence on my degree of conviction, but voted "high" for your stats.  I dont think the degree of damage being caused to the economy is priced in at all. The markets are not always a leading indicator.  In this case they are lagging.

People are going to need to raise money for living.  They will start to tap into investments and alot of it is in ETFs and high flying tech stocks.  We aint seen nothing yet.  Retailers (except,grocers), and restaurants (chain, fast food) are going to get smacked still.  Anyone bought shoes, or clothes in the last 2 weeks? 

Examples:  Sbux is closed, QSR is only drive through, MCD, etc the same.  My wife and many others I know are not buying takeout due to fear, not restrictions.  HD, Lowes, Canadian Tire, are being told curbside only - anyone else who does renovations knows that you need to see and look at purchases alot of the time.  And spring is real busy for these guys.  We (at home) are already forgetting about spring purchases for the garden for this year. 

I am more than fully invested as always.  I hold June expiry puts on a number of liquid names (FB, Goog, HD, Lowes, Mcd, QSR, KO, V, MA, PYPL, BAM).  Some of these I hold long also.  If they expire worthless that means things have held up, but I do not think that will be the case.  Most of the time I am more bullish than bearish. m

We had this coming for years, and Covid 19 is sure aggravating it.  My take.
GARP tending toward value


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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #7 on: April 04, 2020, 05:49:47 AM »
Buffett talked about how markets work on 17 years cycles (though his same size was pretty small). I wonder if we'll see early 2000s numbers as the low.

Gundlach made a great point about sacrificing and Biden saying people shouldn't have to "sacrifice anything." We are so entitled.


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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #8 on: April 04, 2020, 05:49:54 AM »
The previous low occured when everyone was figuring out how the US would respond and if there would be stimulus.

Now, everyone in the WORLD knows the situation and numbers. Singapore is shut down, we should wear masks in the US, etc. Therefore, since this is all widely available info it should be priced in. US government is doing everything at a remarkable pace and US banks were well capitalized.

It can go lower based on today's situation. If this goes on for a long time it could go very low. The entire world is trying to solve this problem that for most people has unfortunately only been a "problem" for about 4-6 weeks.
« Last Edit: April 04, 2020, 05:51:28 AM by chrispy »


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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #9 on: April 04, 2020, 06:22:05 AM »
I agree with the poster who said markers don't seem to incorporate public information quickly enough. For that reason I'm low conviction yes.

I was 80 pct cash going in but then I've been that way for years. I didn't prepare for this and yet I've been debating this thing on Rona thread since January. I knew we were going to get whacked by the virus but with EMT I assumed the market did too.  Apparently the market took a deep breath of the cool but skunky air from up north (and inhaled too) and felt so good we collectively decided to let it ride.   Just frustrating that I saw it coming, I don't mind being down, I actually like it given age and earning power but the opp cost was huge.

All I can do is learn.  I am watching this virus internationally and trying to extrapolate.  I don't think there is any reason to speculate as it will follow predictable patterns. What I saw before in China scared me and what I see now scares me as a short.  With bonds paying nothing and fear driving the market we could get some nasty short squeeze.  It will be painful first I suspect, perhaps, for a month or two but after that we will adapt and mitigate Mr virus and it will be off to the races us my guess.