The S&P 500 Index is already off more than 10 per cent from a record, but traders are betting there’s more pain to come.

Short interest as a percentage of shares outstanding on the US$269 billion SPDR S&P 500 ETF Trust -- a rough indicator of bearish bets on U.S. stocks -- surged to 7.4 per cent this week, according to data from IHS Markit Ltd. That just about matches the highest level seen over the last five years. And with the value of short bets around US$20 billion, the dollar amount wagering on the S&P 500’s demise is close to a record.

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Traders are steeling themselves for further losses amid an incredibly volatile run for the S&P 500, which swung more than 3 per cent on six days in the past two weeks amid growing fear about the economic toll of the coronavirus that’s sweeping the globe. The Cboe Volatility Index, or the VIX, has closed above 30 for six straight days -- the longest streak in nine years. Demand for havens has sent gold prices to the highest since 2013 and bond yields to record lows.

The S&P 500 slid 2.4 per cent at 12:44 p.m. in New York Friday, erasing its weekly gains.

To Matt Maley, an equity strategist at Miller Tabak & Co., it’s all a sign that the sell-off that’s wiped US$3 trillion from U.S. stock values hasn’t reached its nadir.

“A retest of last week’s lows -- at the very least -- will take place before we see a sustainable rally in the stock market,” he wrote. “Given the action in the entire market place this week, we still believe that we’ll see more weakness in the stock market going forward.”