The stock markets recovery from the Chinese Coronavirus catastrophe has been spectacular. Remember the Dow traded down to a low of just 18,213 on 23rd of March 2020 and then over the next 8 months recovered to a new all time high north of Dow 30,000!

This is the final part of a series of in-depth analysis that concludes in a detailed trend forecast for the stock market into January 2021.

Stock Market Trend Forecast into End December 2020, Final Election Forecast Matrix

Stock Market Big Picture
Dow Short-term Analysis
Dow Long-term Trend Analysis
VIX Analysis
2020 vs 2016 and 2012
ELLIOTT WAVES
Seasonal Trend / Election Cycle
Dow Stock Market Trend Forecast Conclusion
US Presidential Election Forecast Matrix Final Update
AI Stocks - AMD is Killing Intel

However the whole of this analysis was first made available to Patrons who support my work so immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

Formulating a Stock Market Trend Forecast

As I alluded to in my post of Monday 28th October, this analysis is resolving in a mixed stock market picture where clearly the big question mark is who is going to win on November 3rd? And worse if there is NO clear winner then that would result in a crash of sorts, perhaps a 10% drop perhaps more, though I see such an outcome as a low probability black swan event.

Whilst if Trump pulls off another election miracle and wins then it's off to the races, the Dow will surge higher, probably break to new all time highs above 30,000 before the end of December 2020. The problem is that Trump winning the election is not probable as my Election Matrix analysis concludes.

And then there in is the problem that a change in Presidency induces increased stock market uncertainty. So regardless of whether Biden turns out to be good for the stock market in the long-run after all both Trump and Biden will print trillions more dollars. However, in the immediate and short term Biden will be negative for stocks due to uncertainty. So probability favours a subdued stock market that ranges from a sideways trend into inauguration day to an outright downtrend. Which on the brightside would generate buying opportunities in our AI tech stocks.

On the upside there is light at the end of the covid tunnel, the VACCINE! That 'should' start materialising in significant quantity just as Biden takes office, so implies to look towards a strengthening economic and stock market prospects as the impact of the pandemic diminishes with each passing week, but until then we still have the third wave to contend with that could see America's total covid death toll double!

Thus this analysis is leaning towards stock market drift into the end of 2020 with limited downside as there is plenty of upside ahead in 2021i.e. an end to the pandemic and that Biden will print trillions of dollars just as Trump has. With a potential black swan bubbling in the background of there being no clear winner on November 3rd as we all know that unless Biden wins decidedly then Trump is not going to concede defeat, hence a stock market panic crash of 10% or so could take place.

Dow Stock Market Forecast Conclusion

Therefore my the stock market forecast conclusion is that the Dow looks set to trade lower towards 25,000 early November before heading higher into Christmas for a likely lower third peak, before succumbing to relatively mild end of year selling into early January 2021 as the market marks time ahead of Biden taking office as illustrated by my trend forecast graph.

Risks to the Forecast

That the Trump Show ends with a spectacular season finale, one where the election outcome is inconclusive or in a very close Biden win that Trump refuses to concede defeat to which would result in a stock market crash of sorts. How much? At least 10%. A low probability event but the last 4 years have literally played out like a dramatic TV show so never say never!

Again the whole of this analysis was first made available to Patrons who support my work so immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

Also gain access to my latest analysis (AI Stocks Portfolio Buying Levels Q4 2020 Analysis) that covers:

US Presidential Election 2020 Forecast Review
Seeing Stock Market New Highs Through the Prism of AI
Stock Market Dow Quick Take
AI Stocks Buying Levels and EC ratio Explained
Top 10 AI Stocks individual analysis i.e. for Google, Amazon, Apple etc.
AI Stocks Buying Levels Q4 2020
The Next IMMINENT Global Catastrophe After Coronavirus

And ensure you are subscribed to my ALWAYS FREE newsletter for my next in-depth analysis.

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

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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