Our focus when forecasting markets is mostly mid to long term. Think of our 2019 gold forecast, 2019 Bitcoin forecast, long term crypto predictions and 5 top stocks forecasts. However, from time to time we do a short term forecast knowing that the risk factor is really elevated when forecasting for the short term. When it comes to stock markets especially in the U.S. we see a positive trend going into March 2019. This is based on one of the 100 investing tips insights.
As per Reuters latest poll the end-2019 forecast is down from November, when strategists surveyed by Reuters predicted the index would reach 2,975 by year end. “The benchmark S&P 500 index will end 2019 at 2,900, up around 3.8 percent from Tuesday’s close of 2,793.90, based on the median forecast of over 50 strategists polled by Reuters in the last two weeks. That would represent a gain of 15.7 percent from the end of 2018.”
Be that as it may we do not rely on news. We rely on our own charts as part of our solid method. So let’s turn to the charts and have them speak instead of just ‘consuming’ what any strategist or financial media site says.
We wrote in our 100 investing tips this secret about forecasting U.S. stock markets and turning points and how to properly use charts and leading indicators:
First, on the highest level and longest timeframe, the 10 year Yields determine the multi-quarter risk on / risk off direction of stock markets as they move from top to bottom in rising or falling channels. Second, on a multi-year timeframe, the Russell 2000 to S&P 500 ratio determines the turning points based on breakout and breakdown patterns. Third, on an intra-year basis, the Russell 2000 to 10 year Yields ratio determines the turning points based on breakout and breakdown patterns.
What we need for a short term stock market forecast for March 2019 is the Russell 2000 to 10 year Yields ratio. The chart is embedded below, and has this concise set of moves up and down in the last 24 months.
The tactical turning points worked like clockwork.
The million dollar question is what happens next. So far it seems that this ratio is set to move higher. The trick with the recent steep rise is it may need a bit of time to absorb this. Consequently, the green trend line in 2019 may be too preliminary to already draw now, it may not be the dominant trend line.
We expect the current uptrend to last at a minimum 6 months. So the pattern in 2019 may morph into something different than what we see now, we have to give the market some time.
So far we are confident that March 2019 will be good for stocks, and even in case of a retracement it will be short lived.
