Stock Market Deviation from Overall Outlook for 2020

Stock-Markets / Stock Markets 2020 Feb 22, 2020 - 12:14 PM GMT

My analysis of 30th December 2019 (Stock Market Trend Forecast Outlook for 2020) concluded in an overall outlook for the stock market for 2020 to target a trend towards 30,750 to 31,000 for a gain of between 8% to 9% for the year. This acts as a road map against which to measure relative strength or weakness as the Dow charts it's trend through the year.

A linear trend to 31,000 by end of 2020 would price the Dow at 28,830 today, against the last close of 29,102 which shows +272 point deviation against the linear trend, despite early January's surge to +750 that many had taken to imply 30,000 was just around the corner, instead resolving in a -600 deviation.

(Charts courtesy of stockcharts.com)

Therefore the Dow continues to target an oscillation around the linear trend forecast towards a target of about 31,000 late 2020, where a significant deviation against which would present a buying opportunity in target AI stocks, that is IF they succumb to general stock market selling.

Given the looming Coronavirus dark cloud then we thus should be expecting a deviation to well below the linear trend over the next couple of months or so, if not starting today then likely within the next week as the failure of the Chinese communist regime to contain the virus becomes apparent. Both in terms of reality and uncertainty as China on its own remains on a trend trajectory towards hitting 1 million infections by the end of February 2020, that's even if we can take the official statistics seriously.

QE4EVER

Money printing fundamentals remain in force. So any sign of economic weakness and the Fed will resume printing money / expand its balance sheet to support asset prices, especially during an election year.

DJIA Stock Market Technical Trend Analysis

As Goes January So Goes the Year

The Dow closed down on the month of January (28,256), accordingly the stock now only has a 50% chance of of ending up on the year. Where the average gain for a down January year is 1.35%. Against 9.1% for an up January. Which translates into expectations for more downside price action than there would have been had stocks closed higher in January.

TREND ANALYSIS

The rest of this analysis that concludes in a detailed trend forecast for the Dow stocks index has first been made available to Patrons who support my work (Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020?).

Stock Market Deviation from Overall Outlook for 2020
QE4EVER
As Goes January So Goes the Year
Short-term Trend Analysis
Long-term Trend Analysis
ELLIOTT WAVES
Formulating a Stock Market Trend Forecast
Dow Stock Market Forecast Conclusion
TRADING THE DOW
Will Trump Win US Presidential Election 2020?

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Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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