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Markets Take Terrible 3-day COVID-19 Data Stretch in Stride

June 26, 2020
Markets Take Terrible 3-day COVID-19 Data Stretch in Stride

From a healthcare timeline, the past three days have been the worst since early March. We’ve seen back to back record surge in cases, Texas “pause” its opening, Disney delay indefinitely its opening of Disneyland, and Apple close more retail stores. This is just horrific. Moreover, there’s not been any news this week on the healthcare side. And the 2020 election race is becoming tighter and tighter.

In the face of this, we have seen a 3% decline in equities last week despite the awful news, and the VIX barely budged. If this happened two months ago, we would be expecting the SPX to visit 1,700 or lower. I think this reflects the real positioning of the market. Investors have little need to sell because few investors are “uncomfortably” long. The best sentiment metric to track >age 60 investors is the AAII survey, where currently the AAII bulls less bears is -25%, 3rd worst reading since the great crash of 2020.

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