Remember December, when stocks surprised with their first 20%-plus correction since late 2013?

It’s less than two months ago, but with the way markets have been behaving, it feels like much longer. Especially after the surprise rally we’ve enjoyed as it retraced 60% to 70% of that Christmas correction.

I think this is a sign of things to come this year. 2019 is going to be the year of surprise ups and downs, with a very strong upside blow-off rally – the Dark Window – still the best scenario, as long as we hold some key support levels just ahead.

At this point, it’s time for another market correction; one that should give the best clues about whether the December 26 low was the bottom before the Dark Window or to expect a new low ahead.

Here’s a likely pattern I see that could confuse both the bulls and the bears at first. That’s why I like it.

If this pattern holds, we’re about to see a steeper crash than we saw in December!

The worst case here is that we fall 24% from the recent high of 25,440 on the Dow (or D wave peak) to around 19,300 (the projected E wave bottom). That would be close to the important bottom trend-line support for the Dow since late 2013, around 19,000.

Such a sharp crash could quickly change the tone from bullish to bearish just in time to start that Dark Window blow-off rally towards as high as 33,000 for the Dow and 9,400 for the Nasdaq by late 2019/early 2020.

The second scenario here would be that we just correct back to the support level at 22,638 or so. That would say that the recent sharp rally was the first wave up in this new and final blow-off rally. That would be more clearly bullish.

If this correction is sharper, which I expect it will be, it could be over by late February.

This correction is very important in this critical time. It could be the decider of whether the markets roll over into a stealth bear market, or we see this more likely Dark Window explosive surge that no one expects at this time… (and that’s another reason I like this bullish scenario).

The key will be for the Dow to hold near 19,000 or higher, and most important, the Nasdaq 5,500 or higher.

Let’s see what happens.