The S&P Hit My Year-End Target 11 Months Early – So Here’s My New Forecast

No one can be right all the time – but I do my dead-level best.

I call it like I see it, and that means when I miscalculate, I own up to it.

Here’s a case where I got the numbers right, but the timing wrong – and then I went ahead and took my prediction a step too far. If you’ll recall, last December I released a bearish forecast for year-end 2016, predicting that (contrary to most Wall Street rhetoric) the S&P 500 would hit 1,875 before the end of the year.

That prediction came true just weeks later…

After a brutal first two weeks, we shaved 1,417 points – more than 8% – off the Dow. The S&P 500 dipped well below my 2016 year-end target of 1,875-1,900, hitting 1,829 before recovering.

At that point, I revised my 2016 forecast even lower, down to 1,650 to 1,750.

As it turned out, I should have left well enough alone.

It’s been obvious for a while that the S&P 500 was not going to hit my revised year-end target of 1,650 to 1,750. As we enter Q4, we are in a market gridlock, with stocks hovering near record highs based on the misplaced belief that central banks are all-powerful. It will most likely take one of these two events to dislodge them.

So here’s my new forecast…

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We’re In A Market Gridlock, But I See One Tiny Reason for Optimism

Last week, markets barely moved.  The Dow Jones Industrial Average added 7 points or 0.04% while the S&P 500 jumped 8 points or 0.38%.  The Nasdaq Composite Index gained 0.83% to close at 5257.40 on the back of big gains at Netflix.

Markets appear to be in a holding pattern until November 8.  Having survived all three presidential food fights, they are now pricing in a Clinton victory, a possible slim Democratic majority in the Senate and a slimmer Republican majority in the House.  The real question is how much Mrs. Clinton, if she does indeed prevail, will be plagued even before she enters the Oval Office by investigations of her emails, the Clinton Foundation, her conduct as Secretary of State, and her repeated lies to investigators and the American people.

In other words, the odds of her entering office with any kind of mandate are somewhere between slim and none – which means we can look forward to, at best, four more years of gridlock.

Regardless of how hard the Republicans come at her, she will face significant resistance in Congress to her plans to raise taxes, increase entitlement spending and move the country further to the left.  The most likely scenario is further gridlock as the country moves closer to another recession and perhaps a financial crisis.

But I do see one tiny reason for market optimism…

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