U.S. Stock market "CORRECTION!!" Why am I not "too-skeered"

Stock Market Forecast For 2019: 7 Critical Trends To Watch

The new year begins with a gnawing question: Is the stock market correction of the past three months a harbinger of an awful 2019, or a launch-pad for a new bull market? While it's folly to make a decisive stock market forecast for 2019, a few trends hold clues.

On the face of it, financial markets seem to sense trouble. On Christmas Eve, the S&P 500 index hit the 20% threshold for a bear market.
Few experts see a recession, but signs of slowing economic growth are piling up. The 10-year Treasury yield has fallen to the lowest since April, even as the Fed tightens and unwinds its quantitative easing program.

The financial sector is in a bear market, with the SPDR Financial ETF (XLF) down more than 20%. The price of crude oil is in a bear market, too, as a supply glut meets worries of a slowing global economy. The FAANG stocks that underpinned much of the stock market's 2017-18 gains are trashed. And the market lacks clear new leadership. The IBD 50 index of leading growth stocks is off nearly 30% from its high.


So how to judge the year ahead? As always, smart investors will keep their eyes wide open to the stock market's actual behavior at any point in time. But seven factors loom large for the stock market forecast for 2019. How they play out will play a huge role in how stocks perform.

Of all these factors, two stand out because of their unpredictability and consequences: trade policy and interest rates. The trade war can expand suddenly into multiple industries and cause spillover effects. Markets fear Fed rate hikes will overshoot, sending the economy into recession.


Here's a look at each of the seven factors, plus tips on how stock market investors can prepare for whatever 2019 brings.