With 2014 behind us, where will the stock market trade in 2015? We've had six straight years of gains after the financial crisis blew up the stock market in 2008 and early 2009. Will we see another market crash in 2015?
One think I'm sure of in 2015 - we will continue to see many people calling for a market crash in 2015, just like in 2014, 2013, 2012, 2011, 2010, and 2009. The great thing about calling for the market to collapse in price, in all likelyhood it will happen at some point, just like we all face the inevitability of death. I don't think I'm going out on a limb there..... unfortunately for some of these doomsday soothsayers, they might be dead before the Dow Jones Industrial Average hits 2,000. Why fight the trend? Why fight every central bank in the world?
I'm going to get into what I see for the full 2015 later on, but for now I wanted to cover a few thoughts about 2015.
(1) $SPY is going to break above the inverted flash crash record high paint job. What do I mean by that? The spike a few weeks ago, late in the session, a full 3% above the ask for absolutely no other reason than algo's going wild, I think that price $212.97 at the time, will get broken in early 2015. As soon as January. You can see the spike on the chart below:
We had the flash crash in 2011. Prices plummeted lower but quickly recovered. Eventually we came back down and broke that price before rallying. I think we will hit that price on $SPY $212.97 and break it to the upside. From there we can re-evaluate.
(2) The US Dollar Index will continue to rally. As the FED contemplates raising rates for the first time since the Industrial Revolution, and central banks around the globe work tirelessly decreasing the value of their currencies, like stocks, there will be no place to go but up for the US Dollar. The dollar has broken out of long term consolidation and looks poised to retake that 100 level in 2015.
(3) Commodities and Precious Metals will continue to be under pressure. Crude oil is already starting the year off on the wrong foot. While we may see bounces, counter rallies, I think the damage is already done. Eventually as prices fall even further we could see supply start to shrink as producers close up shop. But until that time comes, prices will continue to fall. With the US dollar rising in 2015, this will also put pressure on prices including gold, silver, which will weigh on the share prices of gold miners. JB covered this late in 2014 after calling for Gold to drop in March of 2014. Crude oil futures could drop under $40 in 2015.
(4) Cyber Security, Network Security Firms will benefit from continued hacking. Hackers continue to break into secure networks and steal confidential data, emails, correspondences. They shut down web sites, take down gaming networks at the hieght of the holiday. They leak information, data, and threaten corporations. I think this threat will continue to grow and the benficiaries will be cyber and network security firms. I will be trading this via out of the money options on $PANW and $FEYE.
(5) Bonds will continue to work the first half of 2015. Last year inflation was supposed to rear its ugly head, bringing bond yeilds higher. The exact opposite happened. Inflation remains eerily low considering all the actions of central banks around the world. Yields on bonds over seas of countries, who a few years ago were about to default of their bonds, are almost lower than government bonds here in the United States.... which is why we will see demand for US Treasuries remain strong in the first half of 2015. $TLT, the 20 year Bond ETF, will be the way to trade this. I think it heads to near $140 before the summer of 2015.
Later on today I will post some stocks I like, dislike in 2015.
Have a safe, happy, and prosperous 2015.