In the stock market, history is repeating itself before our very eyes. And if you’re paying close attention to the lessons from the past, you could set yourself up to make a small fortune when the bear market ends in 2023.

Here’s the deal. 

The U.S. economy was red-hot in 2021 – so hot that it created breakneck inflation. In order to control that inflation, the U.S. Federal Reserve has embarked on a very aggressive rate-hiking campaign to slow the U.S. economy. 

Those rate hikes are working. In late 2022, the U.S. economy is now slowing rapidly, and inflation is cooling rapidly. The data is pretty clear. 

Yet, the Fed is choosing to ignore that data because it’s hyper-focused on stomping out inflation. As was confirmed two days ago, the Fed is sticking with its aggressive rate-hiking campaign. 

However, Wall Street knows that if the Fed ignores the data too long and stays aggressive into 2023, it’ll walk the U.S. economy straight into a recession. So, Wall Street is sending a message to the Fed in the loudest way possible: by sparking a massive market selloff. 

That’s what we saw this week. On Wednesday, the Fed said it was sticking with its rate-hiking campaign. Then on Thursday, the S&P 500 dropped 2.5% in one of its worst days of the year. 

Now everyone is asking: What comes next in this brutal bear market? 

We can find the answer in history. 

Learning From History

While 2022 may feel unique in many ways, we’ve actually seen this all before. The Fed continues hiking rates into an economic slowdown, so the market throws a fit. 

It always has the same ending: a Fed pivot and stock market boom.  

We saw it in late 2018. Stocks crashed in December of that year as the Fed kept hiking rates into an economic slowdown. A month later, the Fed stopped hiking. Stocks soared nearly 30% in 2019.

We saw it in early 2016. Stocks crashed in January as the Fed hiked into a slowdown. That same month, it stopped hiking rates. Stocks rose 10% in 2016 and another 20% in 2017.

We saw it in mid-2006. Stocks crashed in May as the Fed was hiking into an economic slowdown. Three months later, the Fed paused. Stocks soared more than 25% from mid-2006 to mid-2007.

We saw it in early 1995. Stocks had crashed in late ‘94 as the Fed hiked into an economic slowdown. By March ‘95, the Fed stopped hiking rates. Stocks soared 34% in 1995.

We’ve seen this play before. It’s the same story every time. Fed hikes. Economy slows. Market throws a fit. Fed pivots. Stocks boom. 

We’re in the “market throws a fit” part right now. What comes next? The Fed pivot. Our technical analysis of inflationary and economic trends – as well as historical analysis of the timing of Fed pivots – all suggest that the Fed will pivot on monetary policy in the first quarter of 2023.

If it doesn’t – and the Fed continues to ignore the data – stocks will suffer. 

But we think that is highly unlikely. Instead, we believe the probabilities strongly favor a Fed pivot following this stock market tantrum – and a massive market rally in 2023.

The Final Word on the End of This Bear Market

The time to get positioned for this massive market rally is right now… before it happens!

That’s why, just two days ago, I sat down with my InvestorPlace colleagues and investing legends Eric Fry and Louis Navellier to unveil a brand-new portfolio of top stocks to buy for a new bull market breakout in 2023. 

If you haven’t already, I highly suggest you check out that presentation. It may provide you the best shot to win big on Wall Street next year.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.