Since last November I’ve been forecasting that we are likely moving into another Dark Window of spectacular gains before a big crash in early 2020.

It didn’t look that way into December when stocks were down 20% or more, the largest correction since 2011 during the euro and Greek crisis. But my short-term indicators were saying this was not yet a crash, just another correction.

Yet the Fed backed off its aggressive tightening stance. Capitulating to Trump? More like the slowing global economy from Europe to China.

The response brought a sharp rally: Markets are still high “on the crack” and raring to go on good news.

After the 20% to 25% rally in March, the markets looked like they might take a break and correct before exploding up into the next wave …

But the markets won’t back off. In fact, they’re now looking for the second relief switch…

The Trade Deal with China

Currently, stocks look likely to retest the late September/early October highs before taking a substantial correction.

Oh, it’s got to be imminent. China needs it more than us as they export three to four times to us what we export to them…

But you have to remember that China has a long-term plan: To become the number 1 country in the world and supplant the U.S. leadership since World War II. They are more willing to take more pain for that than we are…

And Chairman Xi is now largely grandfathered in forever as their leader.

I cover this “peak in globalization” in Zero Hour with a great long-term chart with peaking surges in global trade in 1913 and NOW – every 100 years or so.

Trade just seemed to peak recently, as this chart shows.

(Click on image to enlarge)

Donald Trump should be worried about that. The president is perhaps the most controversial figure to hold office in history. He knows he needs to get re-elected in 2020.

And I am predicting the greatest crash in our lifetime to likely start by early 2020…

Uh-oh.

He’s not aware of that threat, given the confidence he’s shown in his 3% to 4% growth economy, although that already seems to be fading fast as I forecast. But he needs this deal to look good even though the near-term consequences do not hurt him as much as they do China’s economy, although China’s recent reprieve on the Mueller report gives him a boost.

Beyond that, China’s recent stimulus now seems to be working, and current statistics like the Purchasing Managers Index and its stock market are up strongly again.

Maybe China does not need this deal quite so urgently near term…

Either way, the deal is likely to go ahead in some form. And that could launch the next wave up of the Dark Window blow-off rally.

We may still see a more substantial correction in the next week or two as I have been forecasting if this deal continues to delay. But if it does go through, the markets are likely to surge upward, maybe very short term, and then a sell-off after the news. Or, the beginning of the next wave up into June/July that could see substantial new highs and prove the Dark Window scenario more fully.

My preferred scenario is that we see a minor setback over the next couple weeks, then the markets rally into the next strong surge up into the summer – on the way up to a final massive peak into September… or January at the latest.

This trade issue with China is clearly the linchpin, either way…

Do you see now why I almost always have two scenarios in the near term and only one scenario in the longer term? The near term has many more cycles at play and politics matter much more.