Based on SCPA, the probability is 100% for the Dow to have already reached its post-crash high, or by September 2020. Such will be the seventh month since the recession began. Coincidentally, the SCPA has forecasted the post-crash high to occur for a dozen other countries by September 18, 2020, as well.
The Dow’s big question for the recession of 2020 is will it last a minimum of one year? If the answer is yes, the SCPA’s probability is 90% for the Dow to pierce its March 23, 2020 low before the 2020 recession ends. The calculation of the 90% probability came from computing the average of the following:
- As of the March 23 low, the Dow had declined by 36.5%. For four of the prior five (80%) recessions, the minimum decline ranged from 41% to 89% before the economic downturn concluded.
- The Dow for all five (100%) of the prior recessions reached its recession low after the seventh month of the recession.
From the findings published on August 27, 2020, in “Probability of V-Shape Recovery Low, Depression High,” the probability is 99% for the current recession to last at least one year. The findings were comprised of Deloitte’s forecasts for the US economy from 2020 through 2025. The empirical data for the US economy dates back to 1929.
With the probability almost 100% for the Dow Jones composite index to reach a new low in 2020 or 2021, and before the recession ends, investors need to be defensive.