Today marks the last session of 2022. And not surprisingly the bears wanted to stake their claim on the session…and on the year by mauling stocks once more.
Right now, the base case for the start of 2023 is continuation of that downward trend. However, that is far from set in stone.
Thus, I thought it would be good to use today’s commentary to review things that could alter the path of the markets for better or worse…and our associated trading plan.
Once again, the best place to understand the base case for next year is in my recent presentation: 2023 Stock Market Outlook.
In a nut shell I expect a fairly run of the mill recession forming in the first half of 2023 with stock prices falling to a range of 3,000 to 3,200. Note the average bear market has a 34% decline which would equate to 3,180 for the S&P 500 (SPY).
The reason we might fall further than average is that the previous bull market had overall stock valuations (PE) as high as the 1999 tech bubble. So, some of that excess may need to be drained out before the next bull market can begin.
Gladly, I also see a new bull market emerging with stocks rising from these lows into year end. That is why my 2023 outlook presentation also concentrates on how to time your way back in at the…
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