Market Outlook, for Week Ending 03/12/2021
More trouble ahead.
The S&P 500 is not down much since my crash warning was issued so far, but the volatility has increased rather sharply.
That said, the VIX is still well below where it was during the bit of market turbulence we had near the end of January so, at best, if we’re in a 15-20% crash, we’re still in the early stages. The VIX futures curve is still positive, with the S&P 500 futures curve still a bit negative.
Also, the metric I use to determine risk for large stock market price changes is still signalling a near 20% crash for the S&P 500, at the roughly 2 sigma level. The danger of a crash will persist for several weeks, at least.
So, not surprisingly, outlook has not materially changed. Expect more high volatility and the danger of more significant downward price movements in stocks this week, in the absence of some combination of Fed loosening and/or positive economic surprises.