Robinson Analytics Revised Stock Market Forecast for 2020
Robinson Analytics produced a forecast for the Stock Market earlier this year. At that time I was forecasting 4% growth Year Over Year. Since we have entered into a Covid-19 Pandemic recession in 2020 (See Robinson Analytics proprietary recession model chart below.), I have to provide a revised Stock Market forecast for the year.
In order to tackle where I think the stock market is going to end up, I have to first to get a take on where the market is most likely headed, up or down. I applied technical chart analysis to the price action and determined that we have a recent cup and handle formation in the market. That tells me that the recent reversal will most likely continue. So I would expect the market to continue to the upside in the near term. So now we have a solidified direction on the market.
My approach to forecasting the 2020 Stock Market or the Standard and Poor’s 500 index is to take a look at the market going back to January 3, 1928 and up to April 24, 2020. I took a look at the daily closing price of the market every day during this period. The chart below shows the historical data over this period and our forecast for price action for the remainder of the year.
As you can tell from the chart, my forecast as of this writing is that we will not be recovering to the all time high of $3,386.15 earlier this year or the beginning of the year level of $3,257.85 by the end of 2020.
Goldman Sachs: If stimulus arrives “according to plan,” the S&P 500 can bounce back to 3,000 by the end of the year and hit $170 EPS in 2021, the analysts said.
My model forecast is that we will most likely achieve a price-level between $2,647.35 and $3,174.64, with my point price-level coming in at $2,910.99. As a point of reference, my forecast is not too far from where Goldman Sacks thinks that market will be at as well. This forecast is, of course, open to revision as the year goes on. Nevertheless, this is my take are where we will most likely be at by the close of the year. So we will most likely have a negative return for the year. That means that we have to look beyond 2020 if we are ever going to achieve new price-levels in the market.
There is one BIG caveat that I need to add here. If the reopening of the economy is not handled well and there is another significant outbreak of Covid-19 that seriously impacts the economy, then all bets are off.
This forecast has implications for how I think our economy recover by the end of 2020. I will leave that to another article that I am planning on publishing.
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