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The stock market is still priced for ‘absolute chaos,’ but the worst-case scenario will be avoided, Nomura strategist predicts

Equities are likely to grind sideways but a full-on rout will probably not happen, disappointing those who have been betting on one, Charlie McElligott said.

Mar 09, 2026 &03480909202631; 15:48 UTC feeds.marketwatch.com Trending 4/5

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Positive for markets

Sentiment score: +35/100

Moderate impact Short-term (days)

WHAT THIS MEANS

Nomura strategist Charlie McElligott predicts the stock market, currently priced for worst-case scenarios, will avoid a full rout and instead grind sideways. This suggests equities are overpriced for catastrophic outcomes, implying potential upside if chaos is avoided.

AI CONFIDENCE

65% High

SENTIMENT GAUGE

NEWS POWER SCORE

AFFECTED ASSETS

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S&P 500

^GSPCIndex

Expected to rise

Market currently priced for worst-case; sideways grinding with avoided rout suggests upside potential from current depressed valuations

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FTSE MIB (Italy)

FTSEMIB.MIIndex

Expected to rise

European equities similarly positioned; risk-off pricing creates opportunity if chaos avoided

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Euro Stoxx 50

^STOXX50EIndex

Expected to rise

Eurozone equities benefit from avoided catastrophic scenario narrative

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DAX (Germany)

^GDAXIIndex

Expected to rise

German equities positioned for recovery from oversold conditions

PRICE HISTORY

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⚡ SUGGESTED ACTION

Consider tactical long positions in oversold equities with tight stops, as current pricing appears to embed excessive downside risk. Avoid shorting into this setup given the asymmetric risk/reward favoring sideways-to-up scenarios.

KEY SIGNALS

Market pricing in worst-case scenarios creates asymmetric upsideSideways consolidation expected rather than capitulationContrarian indicator: bearish positioning may be exhaustedValuation compression already reflects catastrophic outcomes

SECTORS INVOLVED

Equities - Broad MarketRisk Assets

Analysis generated on Mar 09, 2026 at 15:54 UTC

Disclaimer: This analysis is generated by artificial intelligence for informational purposes only and does not constitute financial advice, investment recommendation, or solicitation. Original reporting by MarketWatch. Always conduct your own research and consult a qualified financial advisor before making investment decisions.

The stock market is still priced for ‘absolute chaos,’ but the worst-case scenario will be avoided, Nomura strategist predicts

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