SPX 2020 Prediction, to start the year off weak! Then 3400?

We just ended a decade and a wild ride for 2019 having risen nearly 30%. From here many investors and traders may assume that there will be a strong move lower because prices can't go up forever. Normally, however, after such a strong gain, markets have the tendency to continue to rise the following year.

That doesn't mean we can't see a pullback and that is what we expect at the beginning of 2020. After having risen so much in the last two months, green week after green week volume started to thin out at the top as the big-money left for the holidays. Meaning there could be profit-taking come January.

What happened in 2019?
-The Fed Cut rates 3 times, providing cheaper borrowing so big money took advantage of it and flooded the markets
-The Fed implemented a secret QE4, pumping USD into the economy
-The Trade deal has had great progression, looking to sign Phase 1 (To be signed of January 15th)
-Stock buybacks over $700B which caused artificial valuation of equities

So what do we expect in 2020? A slight pullback to start the year from profit-taking, we just hit a 1.5 Fib expansion level where price failed the first time recently. The expected pullback before the continued move is the previous broken high at first at 3155 which is about 2.95% of a pullback. The ultimate level we're watching for is the 3100-3105 where the impulse for the move higher had begun, that is a 4.3-4.4% pullback from the current price. From there price has the opportunity to make a move up to 3350-3400. However the drop has to be on low volume if traders are to be excited about the upside.

This idea is for educational purposes only, this does not constitute trading or investment advice. TRADEPRO Academy is not responsible for any market activity.