What Will The Stock Market Do In 2019?

What will the U.S. stock market do in 2019? It depends on who you ask.

  1. Wall Street analysts are generally bullish. The average analysts’ year-end 2019 prediction is 3000 for the S&P. Analysts have a bullish bias.
  2. The media is bearish (again), as they are every year. The media (financial media, social media, bloggers) have a bearish bias because bad news sells. It’s in their interest to sensationalize everything and scare the crap out of you. Scary headlines = more attention & ad revenue.

But as always, here at Bull Markets we try to follow the data and remain as objective as possible. We don’t always get it right, but following the data = a much better success % vs. random guessing.

Go here to understand our fundamentals-driven long term outlook.

Let’s determine the stock market’s most probable medium term direction by objectively quantifying technical analysis. For reference, here’s the random probability of the U.S. stock market going up on any given day.

*Probability ≠ certainty. Past performance ≠ future performance. But if you don’t use the past as a guide, you are walking blindly into the future.

Disconnect between fundamentals and the stock market

Macro started to deteriorate in August before the stock market tanked. But our Macro Index is a leading indicator.

Meanwhile, lagging economic indicators (GDP and earnings growth) have been very strong while stocks tanked in Q4 2018. Disconnect between the economy and stock market is normal during a bull market, but not this level of disconnect.

Earnings growth has exceeded 15% this year while the S&P fell more than -6%

Here’s every calendar year this happened, from 1928 – present

As you can see, the 3 historical cases were all very long term bearish cases.

At the end of a bull market, leading economic indicators will deteriorate (which they have since August 2018), then the stock market will top while lagging indicators are still very strong (e.g. GDP and earnings growth).

1 2 3 4
View single page >> |

Disclaimer: Read my full disclaimer here

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.