SPX: Investors Should Expect a Short in Early 2020
Updated
This has been a phenomenal year overall for many sectors and stocks with a likely 2019 finish somewhere between 3248-3258. However, as tax carry-overs end in just about a weeks time, the market remains extremely overbought. 'Big money' rarely sells going into year-end unless something exceptional occurs (i.e. hiking rates like in late 2018, hence the big "drop" last year).
I expect a minimum of a 4-6% pullback sometime in early 2020 with a 10% pullback to around 3028 not out-of-the-question.
Once we move past a 2020 short, there should be some stabilization with overall decent growth in the markets as I have been saying for the past few months. However, looking at the market on a technical and fundamental level, I begin to get very worried once we enter 2021 - that is a topic for future discussion.
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My Top 2020 Sector Picks for Larger Gains (15-20%+)
- Canadian Energy (ENB, TRP, CNQ, SU)
- Precious Metals (Gold, Silver, Platinum)
- Palladium will continue to have a good year but not as strong as 2019
Other Sectors for Moderate Gains (5-10%+)
- US Technology (including Apple)
- Renewable Utilities
- Select Financials (top banks only)
Top Trends of 2020
- No recession
- 5 to 10% pullback sometime in Q1 2020
- SPX to near 4000 by the very END of 2020
- Commodities will have a stellar year
- Crude will remain elevated for most-to-all of 2020
- Strong weakness in the DXY
- 2 US rate-cuts with significant QE through 2020
- Continued weakness in the US economy resurfacing by mid 2020
- A few Cannabis stocks will rebound - but not the entire sector. IIPR is my top pick for a strong rebound
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zSplit
I expect a minimum of a 4-6% pullback sometime in early 2020 with a 10% pullback to around 3028 not out-of-the-question.
Once we move past a 2020 short, there should be some stabilization with overall decent growth in the markets as I have been saying for the past few months. However, looking at the market on a technical and fundamental level, I begin to get very worried once we enter 2021 - that is a topic for future discussion.
--
My Top 2020 Sector Picks for Larger Gains (15-20%+)
- Canadian Energy (ENB, TRP, CNQ, SU)
- Precious Metals (Gold, Silver, Platinum)
- Palladium will continue to have a good year but not as strong as 2019
Other Sectors for Moderate Gains (5-10%+)
- US Technology (including Apple)
- Renewable Utilities
- Select Financials (top banks only)
Top Trends of 2020
- No recession
- 5 to 10% pullback sometime in Q1 2020
- SPX to near 4000 by the very END of 2020
- Commodities will have a stellar year
- Crude will remain elevated for most-to-all of 2020
- Strong weakness in the DXY
- 2 US rate-cuts with significant QE through 2020
- Continued weakness in the US economy resurfacing by mid 2020
- A few Cannabis stocks will rebound - but not the entire sector. IIPR is my top pick for a strong rebound
--
zSplit
Note
A bit of selling action today as the year closes out. Many stocks go ex-dividend today (December 30th) and it is possible there is quite a bit of profit-taking going on from that aspect alone.Looking for a continued short into early 2020 with at-least a 4-5% pullback from whatever the 2019 year-end close is. Reasonable to expect 6-7% and even a slight chance of as much as 10%.
Some "experts" claim a 20% pullback is possible, but without a significant catalyst like the trade deal falling through, I highly doubt we would see a 20% pullback.
Generally, I would say a 4-7% pullback is almost inevitable.
Note
Virtually this entire stock market is extremely overvalued and I would personally advise people to look carefully for value. With RSI's for the year virtually at the most overbought levels in the past 20 years (at one point the nasdaq was near 85-86) there is no point buying into this market.
Canadian Energy is an exceptionally good value right now (Suncor, Canadian Natural Res., and Enbridge are my favourites) - trading below 1.5 book and below 12 P/E. Enbridge is also hiking their dividend by 9.6% by March 2020.
Other then Canadian Energy you can look into Precious Metals for a strong run in 2020. NOTE: Canadian Energy will far OUTPACE American Energy.
Other than these two sectors you want to wait for at-least a hefty pullback as I noted above before entering otherwise your capital appreciation will be hindered in 2020 significantly.
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