NEW REASONS FOR OPTIMISM AMID FINDING A MARKET BOTTOM, DECREASING HOSPITALIZATIONS

April 06, 2020

Has the market put in a bottom? It is too early to tell, but there are real reasons to be optimistic. We are feeling more optimistic that the bottom, in all probability, has been set with the low on 3/23 at the 2200 level on the S&P 500.  

The market will continue to trade in a very erratic way, with any news moving the market up and down. Last month the average swing was over 5% which is basically un-investable; however, in the last couple of trading sessions the market has started to calm down. Below are three ways the market will potentially bottom when it does. 

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Jobless claims were frighteningly bad last week, which everyone expected. The numbers were no surprise. If jobless claims are peaking soon, and that’s a big IF, why does this matter? Stocks have historically bottomed 2-4 weeks BEFORE jobless claims peaked. In 2003, the S&P 500 bottomed on 3/11/2003 and initial jobless claims peaked on 4/18/2003. Payrolls were still negative through July 4, 2003. Stocks bottomed 4 weeks before claims peaked. 

In 2009, the S&P 500 bottomed on 3/9/2009 and initial jobless claims peaked on 3/27/2009. Stocks bottomed 2 weeks before claims peaked. Payrolls did not turn positive until November 16, 2009. It’s too early to tell, but we will be monitoring jobless claims very closely, as I’m sure everyone will. 

S&P

Over the weekend there was a little bit of bright news on the Coronavirus front. New York seems to be approaching a peak.

- Daily new cases +8,327 (4/4) was down from recent two days of 10,841 (4/3) and 10,482 (4/2)
- Daily deaths +594 (4/4) vs 630 (4/3) and 562 (4/2).

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New daily hospitalizations plunged to 574, the lowest figure since March 20th, reversing 16 days of rising hospitalizations. This is very good news. As many are aware, flattening the curve was all about making sure hospitals are not overwhelmed and that beds remain available for all critical patients. Not only for COVID-19, but for anyone getting sick. Therefore, seeing the number of new hospitalizations down is at minimum, a step in the right direction.

“We’re looking at this seriously now, because by the data we could be either very near the apex, or the apex could be a plateau, and we could be on that plateau right now,” Cuomo said Sunday. “We won’t know until we see the next few days – does it go up, does it go down – but that is what the statisticians will tell you today.”

There have been 4,159 deaths, up 594 from the day before. “But the number of deaths over the past few days has been dropping for the first time. What is the significance of that? It is too early to tell,” said Cuomo. 

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Finally, the daily discharges from hospitals is rising at an exponential rate – a trend we want to see grow exponentially. This is good, more cases are being resolved.

The market will continue to go up and down based on which way the virus curve goes.

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