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COVID-19 UPDATE: If markets pricing in "worst is yet to come," 62% retrace, or S&P 500 3,224.50 is the key level. US schools and colleges have surprisingly low confirmed infection rate.

Click HERE to access the FSInsight COVID-19 Daily Chartbook.

STRATEGY: Is "worst is yet to come" or are markets trying to price "second wave"?
For the past three weeks, equities faltered as a renewed set of concerns has undermined the generally positive narrative around equities, and more importantly, is building a heightened sense of dread heading into critical election day (11/3).  

Collectively, the set of rising worries results in a sense that the "worst is yet to come:"
- Europe having more lockdowns
- FDA sets a higher threshold for approval of COVID-19 vaccine, dimming hopes of "now"
- Back to school + flu season adding to fear of a massive new wave of deaths
- 2020 election is very close and as a result, cannot look beyond 11/3 -- the next 40 days is all that matters
- markets way overbought heading into September


If it is pricing in "worst is yet to come" then we can look at the 62% retrace as key, or S&P 500 3,224.50
So it is understandable if one is worried that the worst is yet to come.  But as we know, one cannot tell the market what to do.  And equities may simply be pricing in "the worst is yet to come."

- and if the latter is true, we can think of some levels where stocks will make a stand.
- a 62% retrace of the rally since June would be a convenient place to "price in the worst is yet to come"
- that level is 3,224.50

We are within a stone's throw of that level.  I would view this level as one of the more important levels to watch.  
- US COVID-19 trends are very good, daily cases, deaths, hospitalizations
- US schools and colleges are 21 days into the school year, and a mere 0.075% of US students are infected --> shockingly low
- We see markets able to rally post-election day, with either a Trump or Biden outcome, but less so if it is contested.


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