Rallying Market Makes a Mockery of Every Effort to Forecast It

For any forecaster thinking of going public with a view on stocks, some advice: proceed with caution.

Dizzying swings are torching Wall Street predictions. In the latest, a two-day surge in futures is poised to send the S&P 500 up 20% from its March 23 low, pulling the gauge out of the bear market it reached March 12, at least technically. MSCI’s broadest measure of global shares may do the same.

Pity anyone trying to stay on top of it. Wall Street strategists have revised and amended forecasts, all but helpless to value companies whose staff and customers have been ordered to stay home, or handicap the outbreak itself. Their views run the gamut from optimistic to dour -- at least among those who haven’t given up.

“I don’t think there is any edge anybody can have in predicting. This is one situation even the most senior analysts have said, ‘I have no model, I have no insight in what could turn the market from here,’” said Michael Antonelli, managing director and market strategist at Baird. “Forecasts are just all over the place -- it’s just outright throwing a dart.”

The volatility has made quick work of targets predicting levels nine months out. With such uncertainty, it’s not uncommon for analysts at the same shop to be at odds with one another.

Take JPMorgan Chase & Co. in just the past 72 hours. Technical strategists suggested a slowdown in new cases could put a floor under stocks. The bank’s global equity strategist warned the U.S. market had yet to reach a bottom, indicating deep losses ahead. Then Jamie Dimon weighed in, predicting a downturn that mirrors the 2008 recession.

Each view had an echo somewhere else. Julian Emanuel at BTIG expects the March lows to be tested as bad health and economic news spikes.

Mike Wilson of Morgan Stanley was once squarely in the bearish camp. These days, he’s more positive. Stocks won’t retest lows nor is this period the start of a depression, the firm’s chief U.S. equity strategist wrote.