Stock Market Forecast July, 2015 through January, 2016: Average

The first half of 2015 saw the U.S. stock market bounce around, but end up just about where it was at the start of the year.  Performance had been very close to our models' projections until this past week when concerns over the Greek debt crisis caused markets world wide to stumble.

Our models predict that the second half should start to get better toward the end of the year, but still fall a bit below normal performance.  As far as the model is concerned, it is anticipating normal summer weakness in the course of a maturing -- and slow growing -- bull market. Not much reason to either sell or buy.

U.S. Stock Market Forecast (Value Line Arithmetic Index):
Probable stock market gain 7/1/2015 to 1/1/2015: 4% (Avg. 6 mo. gain since 1984: 4.8%)
Probability of at least breaking even : ~ 70%   (Average for all months since 1984: 73%

(Click on image to enlarge.)

Looking at the graph above, for the past several months our models have predicted weakening market results.  The market in real time appears to be flagging faster than expected.  For the 6-month period just completed, our forecast have been for roughly a 5% gain.  As of last week the market had logged a 4% gain.  But, thanks to fears brought on by Greek sovereign default, the actual  six month result was no gain or loss.  Looking at prior years on the chart, when the market falls faster than predicted it also tends to stay weaker then anticipated for several months.  Because of the uncertainty of pending debt default in Greece and Puerto Rico, it wouldn't be surprising to see more market weakness in the next few weeks. A steep enough tumble might open up a buying opportunity.