Jump onto this bull market now and ride stocks to new 2020 highs

Relax — the stock market’s decline that began on Black Friday is not likely to be more severe than a 4% to 8% pullback. In fact, you might even welcome such a reversal, since it would create conditions for the U.S. market to climb to new all-time highs in early 2020.

These are the latest forecasts from Hayes Martin, president of Market Extremes, an investment consulting firm that focuses on major market turning points. I was introduced to Martin several years ago by David Aronson, author of Evidence-Based Technical Analysis and co-author (with Dr. Timothy Masters) of Statistically Sound Machine Learning for Algorithmic Trading of Financial Instruments. According to Aronson, no one is doing more careful or rigorous work analyzing past market tops or bottoms than Martin.

The last market top Martin alerted me to was in late September 2018, when he predicted that an 8% to 13% decline was imminent. As it happened, the decline — which started just two days after I wrote a column about his prediction — was more severe, taking 18.8% off the Dow Jones Industrial Average DJIA, -0.96%  . That said, in the inexact world of stock market prediction, Martin’s forecast of that decline is admirably close to being on target.

Although Martin was two months early in forecasting a strong recovery in the wake of that decline, I imagine that few of his clients are complaining. The Dow now is 13% higher than where it stood when he forecast a 10% to 14% rally. (Full disclosure: Martin does not have a newsletter, and my performance-tracking firm does not audit his returns.)

The reason Martin is not forecasting a major decline right now is that most of the market’s sectors have participated in the market’s recent runup to new highs. This indicates to him

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