Money & Crisis Stock Market Forecast into Early 2020
Yesterday I reviewed the performance of our Money & Crisis three-month forecast from August.
As a brief recap, at that time I predicted that:
- Gold would correct
- Short- to intermediate-term bond yields would rise
- U.S. stocks would correct to the 2,700s, then bounce hard.
All three of these predictions have come to pass, though stocks only fell to 2,834 on the S&P 500 instead of the 2,700s.
So all in all, we were right on two-and-a-half out of our three forecasts. Anyone who followed these investment ideas made good money in those three months.
The big question now is… what comes next?
Stock Forecast: A Correction, Then a Run to New All-Time Highs
As I write this, the market is primed for a correction of sorts. Internals are weakening. Stocks are overbought.
And from a technical analysis perspective, the S&P 500 has touched the top line of the bullish channel (blue lines below) that has been in play for much of 2019.
All of this suggests stocks are due for a correction – but I think it will be a minor one. We might fall all the way to critical support at 3,020 (orange line above) but given the momentum to the upside, it could be shallower than that.
After that, stocks will rally into year-end, before moving to new all-time highs (north of 3,500 on the S&P 500) sometime in the first half of 2020.
In chart form, I think things will look like the following:
The driving forces for this stock market melt up will be:
- Investors are sitting on $3.4 trillion in cash. At some point, as they begin to fear missing out on the market’s gains, they will begin to buy stocks hand over fist – especially if the economy holds up.
- The economy is not moving into recession. If anything, it’s recovering from a dip in the first half of 2019.
- The Fed is now providing approx. $100 billion in liquidity to the financial system every single month. Between this and the $400 billion in stock buybacks slated for next year, that’s a lot of “buying power” driving the markets.
That last point is key.
The fact is that despite its assertions to the contrary, the Fed has begun easing monetary conditions aggressively. Provided the economy holds up or at least treads water, the Fed’s liquidity pumps will drive stocks through the roof.
And all of this is part of what I call “Trump’s Master Plan.”
Trump Has Taken Over the Fed, But No One Knows It Yet
It all started with an un-reported meeting at the White House in February. While there is no official record of the meeting, a White House spokesperson has now admitted the meeting did take place.
Now, after months of research, I’ve uncovered what was discussed at this meeting.
I’ve put together a report outlining who was there… what was discussed… why Trump’s strategy will ultimately succeed… AND the stock that will soar once he lands his second term in office.
More details coming soon…
Editor, Money & Crisis