Will the stock market crash in 2024?
I forecast trouble ahead for stocks
The S&P 500 has surged 15% since November 1.
That’s roughly two years’ worth of average gains squeezed into three months.
The stock market got too hot, and I think we’re due for a pullback (not a crash… at least not until later in 2024).
Looking at how stocks tend to perform throughout the year has always been part of my analysis.
This “seasonality” helped us make a lot of money last year. Now, it’s telling us to be a little cautious.
Going back to 1950, February (marked in red) has historically been the second-worst month for stocks. Along with September, it’s the only month in which stocks have averaged a loss.
So it would be perfectly normal to see markets pull back here.
The second thing giving me pause is something my friend JC Parets of All Star Charts brought to my attention in New York City last week.
While the S&P 500 continues to flirt with new highs, the list of individual stocks hitting all-time highs peaked seven weeks ago. This behavior typically precedes a broader market drop.
Source: AllStar Charts
Let’s remember the S&P 500 was up 13 of the last 14 weeks. It hit record highs earlier this week.
Again, it’s totally normal — even healthy — for stocks to take a breather here.
What’s my outlook for the rest of 2024?
While 2024 is setting up to be another great year for the stock market, I’ve learned to expect the unexpected.
Everyone and their mother thought stocks were going to fall in 2023. We took the other side of that bet and made a lot of money. Now, it’s time for prudence.
With the S&P 500 at new all-time highs, I see a lot of people getting very bullish. Speaking from experience, that makes me nervous.
Our research suggests 2024 could be rockier than last year. The biggest “known” risk is the US presidential election.
This will be the most extraordinary US election ever, and not in a good way. Prepare to be depressed by the rhetoric, especially heading into November. This will likely weigh on the national psyche. Investors will go “risk-off.”
I wouldn’t be surprised if stocks sell off, maybe even crash, heading into November’s political “Super Bowl.”
For perspective, stocks typically go up in election years. Since 1928, US stocks were positive 90% of the time — gaining 11%, on average.
I forecast the stock market will end 2024 higher — but the path will be rocky. You could say I’m cautiously bullish.
What I’m doing: continuing to own only great businesses profiting from disruptive megatrends.
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