Monday, June 8, 2020

The S&P 500 Erased All Its Losses for 2020, Rising More Than 44 Percent Since Its Low in March

The S&P 500 rose more than 1 percent on Monday, which erased all the losses for the year.

Who would have thought this was going to happen?

This what I wrote in the EPJ Daily Alert within 48 hours of the exact bottom, when most traders were still in panic mode:
The stock market is getting pummeled day after day. It is seemingly non-stop. At least in 1987 and 2008, the carnage slowed after the Fed started to intervene There was one more low, in both periods, a couple of months out and that was it.
The current Fed money printing hasn't slowed the carnage at all. The market continues to get hit and hit. The way the market is getting hit reminds me of the Paul Volcker years before August of 1982.

Specifically, before of August of 1982, the market was just getting hit and hit in early 1982 as Paul Volcker was keeping interest rates high to fight off inflation and everybody knew it. Then in August of 1982, Paul Volcker's Fed decided to change course and ease up when that happened all hell broke lose to the upside.

Starting in the middle of August 1982, the stock market shot up day after day. It was a buying panic.

After bottoming, the market fully recovered its prior peak just 83 days (2.8 months) later on November 3, 1982.

From an August low of  777 the Dow closed the end of 1982 at 1,046!

There was no churning of months before the explosion.

The key was, there was a specific event that everyone understood would end the pummeling in the stock market. If the Fed was no longer pushing interest rates higher, the worst for the economy was clearly over.

There is an even clearer specific event this time, when the lockdown is over everyone will know the worst is over and I expect the same kind of advance as in the second half of 1982.

The lockdowns may end by regions but at some point it is going to be understood the worst is over. It will be a trigger event, 1987 and 2008 didn't have such trigger events. The current perod, like 1982, does.
I then concluded (highlight in original):
I believe the end of the lockdown trigger event will be recognized by investors sooner than later. I am now advising to go ALL IN in the EPJ Model Portfolio. Take the remaining cash and add it to the SPDR S&P500 ETF (Symbol SPY) position.We may not be at the exact bottom but we are very close and I will just ride out any bumps because once the spike comes it is not going to stop. 
 This one looked kind of obvious to me especially with the massive amounts of money being pumped into the economy and which I report on in the Alert every Friday.


Please note: Past spectacular forecasts do not mean future spectacular forecasts.


  1. Gotta hand it to ya, its true. Glad I went all in

  2. Me too, Dan. It’s the best financial commentary I’ve ever experienced.