Stock market forecast September 2020
Latest update: 09-09-2020 01:32
In the previous months, most stock markets went sideways or lower. Only the US stock markets were pushed higher by tech stocks. That phase is now over.
We are now moving to a different phase and also completely different stock markets. A lot will happen in the coming months and I have listed the main themes below.
The United States Presidential Election
This always creates uncertainties. And investors don't like uncertainties. This is something that will mainly play next month. But it will also play a role this month.
The presidential candidates will increasingly profile themselves with hard statements. There may be issues that stock markets will respond to.
The central banks
I don't expect too much action. The ECB has a policy of only taking action when it is really necessary. Until now, the Fed's policy has always been that not much is done just before presidential elections. I expect more central bank action by the end of this year and early next year.
In recent months, economic data has continued to improve. End lockdowns and then clear backlogs. Many investors saw those better economic data as evidence of a v-shaped economic recovery.
I have always had the view that it had more to do with clearing backlogs. If so, economic data will deteriorate this month and next month.
That is something that investors do not take into account at all. I expect more bankruptcies, especially among small and medium-sized businesses. In addition, rising unemployment.
In recent months, European stock markets have gone sideways or slightly lower. US stock markets sideways to a little higher. The Nasdaq was the biggest climber. It all had to do with just one thing.
The ever-increasing American tech stocks. Of course, many tech companies were the big corona winners. Most tech companies also have a bright future ahead of them. But the latter has been in the price for years.
Last summer, however, those tech stocks continued to rise. As a result, the price / earnings ratios for many tech companies became unrealistically high. We now know that there was more to it.
At least one large investor has, using multi-billion dollar derivatives, pushed up the market prices of those tech stocks even further. Such a situation is ultimately unsustainable. So came the decline.
The question now is whether this decline will continue. I expect so. But probably not straight down. Those tech stocks are so popular that after every short-lived decline, investors immediately see bargains in them. That in turn provides a short revival.
Ultimately, we then move to a situation with more realistic price-earnings ratios. I expect the figures for the third quarter to play a major role in determining this.
They will only come from mid-October. Until then, I expect a downward trend, but with occasional large price fluctuations during falls, but also during the short-term recovery.
Issue more shares
Investors do not take this into account at all. I therefore see the greatest risk for the stock markets in raising capital through the issue of new shares.
Tesla has already announced that it will issue more shares. I expect many more will follow. The reason why a company issues new shares is very important.
For growth plans or, as with the gold and silver seekers, to look for even more gold and silver with a drilling plan is not such a big problem. But having to raise money through the issue of new shares because they urgently need money will cause heavy punishment on the stock exchange.
The biggest risk is that these new share issues will become a trend. Then investors will look at which companies are at risk of doing this too. As a result, all those shares will be dumped.
And if the company then has to decide to issue new shares with a share that has already been punished, the spiral down is a fact. So keep a close eye on those new share issues. It's the canary in the coal mine.
The gold and silver price
It still looks great on gold and silver. The bull market is a fact. All but one of the strong foundations for a very strong gold and silver bull market are in place. I will mention them again:
A low interest rate so that savers no longer receive interest.
Due to the low interest rate, no more return on bonds.
Print money that they have already done and will have to do more.
The US dollar in a downward trend.
The above is enough to get the gold price to $ 2700 and the silver price to $ 50 or higher in the not too distant future. However, the icing on the cake is still missing.
Rapidly rising inflation. It will come. Based on the low interest rates and the money printing, I can come up with a very economic story why inflation will rise. I can also approach it from the other side.
We can only get rid of that huge debt with higher inflation. It's a necessity and that's why it's going to happen. The fact that the FED has indicated that it has no problem at all if inflation rises above 2% in the near future is the first step.
If inflation will rise sharply in the coming years, gold will go to 5000 dollars and silver to above 100 and probably even towards 200 dollars. I expect inflation to pick up towards 2% sometime early next year.
For this month, gold and silver will have to contend with a falling dollar and tensions around the presidential election and between the US and China.
The results so far
The ETF website:
During the stock market crash earlier this year, I bought a lot. A few months later I was able to sell with good profits. After that, sideways moving stock markets so that no buying opportunities arose.
I am waiting for a big drop to get back in. I expect that big decrease this month and next. Then there will be purchase transactions again.
The gold mining website:
Great results. Outlier is the Australian gold digger that I sold with a profit of 1850%. The shares of companies with gold mines in production also performed very well.
Despite the nice increases, I still call it laggards. When the gold price hit $ 1900 in 2011, those mining stocks had skyrocketed. Only a baby increase compared to then now. It has 2 causes.
Those mining shares fell sharply during the stock market crash earlier this year. The recovery came quickly. But first climbing out of the well and then rising into the clouds is a long road that takes more time.
The second cause is that many mines have come to a standstill due to corona. As a result, the figures for the second quarter did not give a good picture. The mines are back in production this quarter. I am therefore looking forward to the figures for the third quarter, which unfortunately can only be expected in about 2 months.
There are now 3 prospectors on the gold mining website. They are all 3 drilling. The first results are probably already coming this month. I am very curious because it looks very hopeful with all 3. These are going to be exciting times.
The silver mining website
Good results but otherwise the same story as with the gold mines. There are also differences. The silver price has already risen faster than the gold price. Then the silver mining shares can also go up faster.
What plays a major role in this is that there are many gold mining and gold mining companies. However, relatively very few silver mining and silver mining companies. Investors investing in that limited number of companies can put the stock up very fast.
In addition, fewer companies is not the only thing. The stock market values of silver companies are also peanuts compared to gold companies.
The monthly forecast for the stock exchanges
I see all kinds of problems and risks. And with the best will in the world, I can't find anything big positive. Then there can only be one conclusion and that is that stock markets are going to fall this month. I see the bigger picture as follows.
Down until the US presidential election in early November. President is known and the uncertainty is gone. The FED will come a few days later and it will turn out with big stimulation. Stock markets are springing up from the bottom, booming and the end of year rally is a fact.
The monthly forecast for the AEX
I expect the AEX to drop below 530. My first goal is 490. If it is not possible to make a bottom there then the heavier support at 470 comes into view. All temporary.
From the beginning of November, the AEX will start its end-of-year rally with fewer uncertainties and on the fuel of the FED.