Equities Q1 Technical Forecast: Stocks May Rebound But Any Rally Not Expected to Last

Equities Q1 Technical Forecast: Stocks May Rebound But Any Rally Not Expected to Last

Last quarter, the scene for stocks got progressively uglier, highlighted by an unusually weak December. In 2019, expectations are for the S&P 500 to suffer significant losses at some point, after having completed a five-wave bullish sequence off the 2009 low. The first major downside target arrives at the 2009 bull-market trend-line.

The eventual target for the down-move clocks in at a full reversal of the last leg of the bull market, meaning a move down to the 2100/1800 zone. This will take some time, of course, barring a major unforeseen catalyst. However, despite a strong bearish bias for the year, modest strength could develop in the first quarter with markets having become oversold in Q4. Any rally that ensues will be viewed as a rally to sell.

US S&P 500 PRICE CHART: WEEKLY TIMEFRAME (FEBRUARY 2009 TO DECEMBER 2018)

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