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Time To Buy The Coronavirus Stock Market

Mar. 06, 2020 10:03 AM ETS&P 500 Index (SP500)IVV, VOO, SPY938 Comments
Alon Zieve profile picture
Alon Zieve


  • I analyzed S&P 500 trading data over the past 90 years and compared how this correction compares to others.
  • This is the fastest correction in the data group, hitting the 10% technical correction threshold within six trading days.
  • Trading volumes are exceptionally high, exceeded only by those in the November 2018 and 2008 corrections.

The coronavirus outbreak triggered the 2020 stock market correction. The question on everyone's mind is: When is it time to trade the 2020 market correction? My working assumption is that there is little to no long-term impact of the coronavirus. While Covid-19 might wreak some short-term havoc, in the long term it is unlikely to create fundamental structural market change. In order to try and figure out where we are in the correction cycle, I analyzed historical S&P 500 (SP500) data to pick out underlying patterns.

I downloaded S&P 500 trading data from the beginning of 1928 through to today. Over that time period, I identified 24 episodes in which the S&P 500 entered correction territory, as defined by a fall of 10% or more from a recent high. Within those correction episodes, there were times were the index would enter correction, reach an initial low, climb somewhat, and then fall by 10% or more again. This added another 47 episodes to my data set.

The coronavirus correction is the fastest ever

This is the fastest time in which the S&P entered correction territory, taking a mere six trading days in which to do so.

Coronavirus Correction is fastest correction ever

The list of the top five fastest corrections includes the Great Depression yet excludes the Financial Crisis of 2017, which took 33 trading days in which to enter a correction. The list also includes the tech crash of 2000, which narrowly misses the list by one day. There appears to be no trend over time, and so the fact that the top two are most recent is not necessarily indicative. While it is true that high frequency trading has taken off in recent years, the corrections of November 2018 and August 2015 took one and a half months and two months, respectively, before entering correction territory. Over the 90-year data set, no clear patterns emerge.

This article was written by

Alon Zieve profile picture
Alon is an experienced growth company executive, currently serving as the CFO of Bringg. Previously Alon was the COO of Seeking Alpha. Alon joined Seeking Alpha in 2016 and was responsible for the media business, operations and finance. Alon previously served as CFO of Natural Intelligence, and  held a number of executive positions within the BATM Group.  Alon holds a BA in Natural Sciences from Cambridge University, and an ACA from the ICAEW.

Analyst’s Disclosure: I am/we are long SP500. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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