The forecasting model says:
November:  +3%  (Way above average)
Next 6 Months: 4% (Average)
Probability of at least breaking even:  Above average

The predictive model really likes a sudden stock market correction!  The one month forecast is unusually favorable: a 3% gain.  Don’t get too too excited as the one month model is not nearly as accurate at the 6 month model.  None the less,  the model thinks a rebound is pretty likely for November or December.

As opposed to the enthusiastic one-month outlook, the six month stock market outlook is much more tempered — probably just a normal gain of roughly 4%.  Why?  Even though the economy is doing quite well, the upside potential just isn’t great. Stocks are highly valued by most any metric.

With the U.S. mid-term elections next week, I wouldn’t count out more immediate market volatility.  Suspense is high.  Fear and hope are high.  In a week there is a very good chance that there are going to be a lot of people whose fear has turned to hope and vice versa.  My guess is that the result that will be least disruptive will be for a split U.S. Congress.  Pretty likely in my book.

Either way, any really big money in the market has already been positioned conservatively.  A short term bebound becomes most likely.

(Click on image to enlarge.)