The year 2019 is now in the books, and it is safe to say that a year ago no one accurately predicted what was going to happen. After a horrendous fourth quarter in 2018, stocks rocketed higher in the first quarter of 2019. Fed Chair Jerome Powell shifted to a dovish stance and stayed that way for the entire year. "Don't fight the Fed" was the only advice you needed to navigate the market during the year.
Some mid-year concerns about an inverted-yield curve and possible economic slowing caused a pause, but then endless promises of a trade deal with China kept pushing the market higher. The year concluded with friendly central banks, good economic news and a "phase one" trade deal with China. The end result was some of the best returns so far for the indexes, but there was massive underperformance by many professional money managers, who may not agree that it was a great year.
Many market pundits are predicting that 2020 is going to be a much more "challenging" year for the indexes. Maybe, but the only thing I know for sure is that there will be plenty of ups and downs, which will provide hard-working traders with many new opportunities. I don't even want to try to predict what might happen as it tends to create expectations that can impair objectivity.
What matters most is not where the indexes end up a year from now, but how we navigate it along the way. We need not fear downtrends or selloffs, as long as we honor the price action and let it be our guide.
I hope you'll join me in 2020 for your best year of trading ever. I promise you plenty of insight into market action, discussion of trading tactics and some interesting names to trade. I'll be focusing on the fast-moving momentum and small-cap names.
Happy New Year. I'll see you on Thursday.