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Wall Street's SPX forecasts for 2020

Every year around this time of the year Wall Street’s investment firms release their stock market outlooks for next year. Investors, both retailers as well as institutional types, anxiously wait for these predictions.

As 2019 comes to an end, S&P 500 Index is up over 24% so far this year. Lacking a major market selloff into the end of the year, SPX will record one of the largest annual gains since 2013. So, what are Wall Street’s top strategists and analysts predicting for next year?

Wall Street market pundits are forecasting everything from modest or nominal gains to losses for the US stock market for 2020. In general, market professionals don’t expect too much from SPX for the New Year. They tend to favor Financials, Consumer Discretionary, and Value stocks and sectors. They are defensive on Consumer Staples and defensive related sectors.

As is expected, Wall Street Journal, Reuters, Bloomberg, CNBC, and other financial press/media have complied the following year-end 2020 SPX forecasts from the investment community:

Wall Street Journal: The mean SPX target from 8 investment houses for year-end 2020 came in at 3,241. The high forecasts came from Goldman Sachs and BMO at 3,400 SPX targets. The middle SPX targets were from Citigroup and BAC/Merrill Lynch at 3,300. Stifel, Morgan Stanley, and UBS were the low SPX forecasts coming in with targets between 3,000 and 3,100 by the end of next year.

CNBC: Conducted a similar survey compiling SPX year-end 2020 targets from Wall Street Strategists. The Strategists polled had a median SPX target of 3,325, and an average SPX target of 3,272.

Reuters: 52 Wall Street Strategists released SPX predictions for the New Year. The average forecast for SPX by year-end 2020 was 3,260.

As you can see from the above predictions it appears that many of the SPX forecasts for year-end SPX targets gravitate toward 3,250. With a closing price today of 3,112.76 this would suggest a SPX rally of 4.41% for next year.

It may be newsworthy to have the highest or even the lowest SPX forecast on the Street as this will attract widespread press and media attention. However, astute and experienced investors recognize forecasting SPX target is a difficult task. And to predict the SPX target by a specific date, 12/31/20, is even harder.

Wall Street forecasts are important. Not because it will come true. Rather these predictions will help us better understand the mindsets of investors (i.e., herding mentality). That is, many retail investors and professional investors will use their firm’s top Strategists SPX forecasts to implement equity allocations.

As technicians, we believe the stock market discounts all available news possibly days, weeks, and even months in advance. So, when everyone has already projected a SPX target, the market would have anticipated this move and the intended target will be achieved much earlier than expected or not at all.

Enclosed we have summarized our SPX targets based on recent technical breakouts:

Near-term SPX target = 3,225-3,234 (based on 10/25/19 and 10/28/19 triangle/ascending breakout)

Medium-term SPX target = 3,360 (1-year uptrend channel breakout on 11/26/19)

Intermediate-term SPX target = 3,653-3,740 (2-year broadening top/bottom and/or 2-year head/shoulders bottom breakout on 11/1/19)


Source: Courtesy of StockCharts.com


Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

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