You’ve heard it a thousand times: Past performance is not a guarantee of future performance.

Yet, past performance is all we have to forecast the future. This is true everywhere. If you play fantasy football, you make decisions for next weekend based on past performance. When hiring or promoting someone, managers make decisions based on past performance.

So, it makes sense to consider the past when thinking about the future of the stock market and how to invest your money.

I use several mathematical tools based on the past to forecast the direction of price moves. And my tools tell me 2018 could be a challenging market environment.

My 2018 Stock Market Forecast

The chart below shows my 2018 forecast for the Dow Jones Industrial Average.

You’ve heard it a thousand times: Past performance is not a guarantee of future performance.

Yet, past performance is all we have to forecast the future. This is true everywhere. If you play fantasy football, you make decisions for next weekend based on past performance. When hiring or promoting someone, managers make decisions based on past performance.

So, it makes sense to consider the past when thinking about the future of the stock market and how to invest your money.

I use several mathematical tools based on the past to forecast the direction of price moves. And my tools tell me 2018 could be a challenging market environment.

My 2018 Stock Market Forecast

The chart below shows my 2018 forecast for the Dow Jones Industrial Average.

The forecast shows the direction of the expected trend, not price levels. For prices, I expect new all-time highs for major stock market averages in the first months of 2018.

This forecast is based on a combination of the recent price action and longer-term cycles. For example, one of the cycles is the presidential cycle. This is a recurring four-year pattern related to the president’s term in office.