What's in Store for US Markets in 2019 ?

Last week Dow Jones Industrial Average (DJIA) closed just shy of 24000. This gave Dow an impressive 2.6% gain from the start of the year 2019.

What next is the million-dollar question that begs an answer? I am going to provide some insights which should answer this question.

Forecast for Next Week

Come Monday, DJIA should see a steep drop. It will be due to the patience of the market participants running out over Federal Shutdown. Thereafter there will be volatility for the week with DJIA visiting levels above 24000 and below 23000.

Forecast for Month of January

The month of January will present a good opportunity for traders to profit from going long from sub-23000 level. From this level, there is an excellent chance of profiting until the level of 25000. This may not be achieved fully in January, but certainly, by February we can see 25000 in Dow.

Forecast For First Half 2019

The first half of 2019 will be spent in volatility with Dow between levels of 23000 and 25000. I would expect the bias in this yo-yo journey to be southwards, but this can be said with certainty as the action unfolds. I am basically saying that Dow will be moving sideways for the first half of 2019 between the levels of 23000 and 25000. However, jubilant reactions to some unexpected good news may allow Dow to reach levels of 26000.

Forecast For Second Half 2019

The second half of 2019 will see either continuation of sideways movement with southwards bias or an effort to reclaim the level of 27000. High probability is the former case of slow Southward Drift so as to be positioned for a good sell-off by 2020 -2021.

Here the reason lies in the inversion of US Treasuries' Yield Curve of 2-year and 5-year maturities. Now market participants will be keenly watching the yield curve of 2 yr and 10 yr maturities which is presently flat with narrow yield difference of 17 basis points. This hints that the yield curve of these papers has a high probability to invert anytime in future.

Early Signals if Dow Movements were to Differ From Above Forecasts

Let us now list the various early signs that will tell us that Dow will behave differently from what I am predicting:--

1. If Dow fails to reach 25000 levels and violates 22000 levels on a closing basis, then we will see much lower levels in 2019.
2. Alternatively, if Dow crosses above 27000 levels on a closing basis, then new highs will be made.
3. If the sideways movement takes place between levels of 22000 and 24000, then we will find Dow at lower levels than 22000 in 2019.

Seeking Views

I have charted the entire Dow movement for 2019. Anyone wishing to seek the detailed reasons for each of these forecasts is most welcome to do so in Comments Section and I shall be delighted to provide the reasons.

I shall also be updating you on weekly movements as and when appropriate. Your views will be highly appreciated by me and other readers. Your views may provide some new insights from which all of us may benefit.

Keep trading in 2019 with profit!