Coronavirus Positioning and the Next Bull Market

Brian G. Belski, Chief Investment Strategist.

There is no denying that a cyclical bear market has begun. Only two primary questions remain: duration and depth of the pain. At this point, another 10-20% downside is not out of the question, especially considering the growing number of disparaging forecasts and the crisis in confidence of governments. As such, we caution investors against seeking support levels, fiscal or monetary policies let alone symbolic events or gestures (e.g., corporate buyouts) to foretell or solidify a traditional bottom or capitulation. Given the irrational and fear-laden nature of the current stock market, historical precedence and traditional bottoming signals carry little to no weight in our view. Instead, markets and society likely need to see less negative (second derivative) headlines and actualities surrounding coronavirus (COVID-19 virus) to become reality before a bottoming process is likely to ensue.

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