Stock Market Forecast

Stock Market Predictions

Investors Lose interest in 3 Month and look to 6 Months Outlook

Economists and stock market forecasters alike are befuddled by market trends and aren’t sure where the markets will be in 3 months or 3 to 5 years.

But the signs might be overly clear about where we’re headed.  The DOW just hit it’s worst run in 90 years. Yet investors hang on and some experts still advise on buying the dip. When the Fed announces another big rate hike in a couple weeks, the outlook will be clearer.

Some fund investors are in a funky mood, avoiding investing in the energy sector despite record profits.  Yahoo reported investors pulled $700 billion from the iShares energy fund alone.  These investors are going to take a bath as the US economy plunges.

The Fed believes inflation is a huge threat with big increases continuing throughout the summer. Food, fuel, wages, rent are all up strongly and won’t be tamed easily. The Ukraine’s food output is done for the year, putting Europe in dire straights.

One oddity this week was the value of WTI oil rose above Brent price showing how strained supply is in this hemisphere.

3 Month, 6 Month and 5 Year Forecasts

See today’s stock market data below. And enjoy the expert’s forecast, 3 month forecast, 6 month forecast, and 5 year  to help you visualize the investment road ahead.

What should you invest in?  Definitely have a plan for navigating all the financial and geopolitical trouble ahead. Craig Johnson, Chief Market Technician at Piper Sandler says if the markets fall below support levels, we could see a washout in the market. Yet Fundstrat’s Tom Lee with CNBC’s Melissa Lee on Fast Money says some mega tech stocks are worth a look.  Tech stocks are highly affected by rising interest rates, consumer sentiment, and inflation, so those holding tech stocks could be in for a blood bath, particularly in the fall.

Recession Indicators Glowing Stronger

Ethan Harris, head of global economics research at Bank of America Corp. “We’re either going to have a weak economy or a recession.” — TBS News Report

Jamie Dimon said there’s a 66% likelihood the U.S. is headed into a mild recession or something even worse.

We put the odds that the economy will suffer a downturn beginning in the next 12 months at one in three with uncomfortable near-even odds of a recession in the next 24 months,” said Moody’s Analytics chief economist Mark Zandi said in a May 16 note — Washington Post.

These economists aren’t the only one’s as more predictions of late are negative.

Stocks Slump into the new the Week

Last weeks markets were a disaster and next week’s likely won’t be much better. With the war raging, oil prices and interest rates surging, the markets are losing focus and direction.

The DOW plummeted 1200 points on Thursday, and it’s almost a regular occurrence as poorer earnings, high rates, and consumer spending numbers irk investors.  The Dow was down 13.7% last week with the S&P falling almost 16.6% as did the Russell 2000, while the NASDAQ dropped a scary 24%.  Tech stocks are plummeting and the NASDAQ is down 17.7% year to date.

With the tide going out on all investments, you’ll be hard pressed to pick any winners. Advisors are saying there is nowhere to hide. Even the energy sector will be hurt by lower GDP and manufacturing, with travel eventually crashing by September too.

As an example, Canadian heavy crude producers such as Athabasca Oil had astonishing stock price growth, that has flattened, along with other Canadian producers. With manufacturing demand diving, the demand for that heavy crude (used in jet fuel, plastics, diesel and other applications is falling).

The key thought now is that the current US government has minimal tools to fight inflation. Some experts are saying that Inducing a recession is their only route left. However, other geopolitical events are helping out on the inflation front, yet are cutting the global economic outlook.  After printing $5 trillion during the pandemic, the money supply is bloated and there’s few ways to stop the flood of money from sloshing around to create supply/demand imbalances. Too much money pursuing too few goods.

The fed has talked of three 50 basis point hikes, and there was mention of a .75 point hike.

The threat of a recession is finally sinking in with investors but a real recession may be further off, perhaps in 2023.

3 Month Outlook is weakening and 6 Month is Dimming quickly

Canaccord’s Tony Dwyer says there is a path to better stock market performance toward the end of this year.  But he didn’t count on sanctions against China and new record prices for oil. Should we gloss over the 3 month forecast and 6 month forecast to the last quarter of 2022?  I picked 2023 as the year of the recession and it’s looking more accurate as we near it.  Will the stock market crash and will the housing market crash?  It’s looking more likely as too many warning signals are flashing now.

Goldman Sachs predicted there is a 35% chance of a recession. Yet for the US, which is morbidly dependent on China, these challenges are warnings to bring production back home to the USA.

Making the outlook more worrisome is a new China/Russia financial alliance, and China’s potential invasion of Taiwan being on hold for now  Inflation is not expected to ease for some time, and the new rate hikes will raise debt and financing costs thus worsening the actual lives of small business and Americans.

Falling consumer sentiment is just one more signal that a correction may be on the horizon.  With earnings falling, P/E ratios of 30 to 1 to 50 to 1 are unpalatable.  With poor sentiment, will self-directed investors launch an even bigger selloff?

Consumer Sentiment Index USA
Screenshot courtesy of www.sca.isr.umich.edu/
Consumer sentiment index last 5 years. Screenshot courtesy of Ycharts.

Investors may want shy away from next weeks stocks, next months and even the 3 month outlook and find stocks to hedge against a recession.  Make your new stock investing plan based on the 5 year forecast or even 10 year forecast.

Bear Market Territory

Jim Cramer of CNBC was making comparison’s to previous crashes so that’s not good conversation. There is no talking down oil prices for long as the global economy starts moving again and rising interest rates suggest a slide and some fear a looming market crash in 2023.  The 3 month forecast shows clearly that the slide that is not over. If you’re buying now to hold on for 5 years, then you should be fine.

The rise of the US Dollar is due to a flight of investors, who are selling off to wait for the market to return.

Lael Brainard, usually a more dovish policymaker, said she expected “a combination of rate increases and a rapid balance sheet runoff to bring U.S. monetary policy to a  more neutral position later this year. Further tightening would follow as needed” — from CNBC report.

Current Major Indexes (as of May 5)

  • S&P 500 : 3,901↓
  • Dow Jones 30 : 31,261 ↓
  • Nasdaq : 11,354 ↓
  • Russell 2000 : 1773 ↓
  • WTI Crude Oil : $110.60 per barrel ↑
  • Gold : $1,845 per ounce ↓
  • US Dollar : $103.03 ↓

The market selloff across the world is making the US greenback a popular choice. The greenback is bolstered by expected interest rate rises, as inflation may not be cooling off for some time.  Is the US dollar still a safe haven?

Sector Watch

Trading Views sector watch shows some interesting possibilities in producer manufacturing. The 3 month performance was outstanding and with global supplies cut, US companies will become businesses go to source in 2022. US manufacturing GDP is well down from last year, so what will a full economic reopening along with lower imports do for US producers?

Despite being neglected, the US energy sector will continue to perform very well.  The US dollar is up too, generating higher revenues for US exports.

Stock market sectors.
Stock market sectors. Screenshot courtesy of Tradingview.com

Expert Forecasters Projected Excellent Growth

Brad McMillan CIO of the Commonwealth Financial Network is projecting 7.5% nominal economic growth and 3.5% real economic growth in 2022.  That projection is bullish and the summer season will help, but full year will likely not make it.  However, the inflation problem is not transitory and it looks like the only tool Biden has to deal with it now, is to raise rates. That creates a likely US recession including a harder landing than many expect.

The tech sell off always happens when interest rates rise and inflation continues. Tech stocks were dumped on as the talk is about inflation and rising rates rises.  See more on the best stocks to buy.

See more on the big winners and losers below and more about which stocks to buy.  Do the stock market crash prognosticators have a leg to stand on? Well, the 2022 mid term elections will be a battle.

Forecasts for the S&P

Bank of America forecasts the S&P will be flat next year rising only to 4600, however it’s already hit a record of 4799 during a dark moment. On the other hand Goldman Sachs’ predicts the S&P 500 will rise to 5,100 (+12%) by the end of 2022. BMO feels it could reach 5300. That’s well down from 21% growth during 2021.  JPMorgan is projecting a 10% S&P gain to 5,050. Morgan Stanley is predicting an S&P drop from 4500 now to 4400 in 12 months.

Market Changes This Week

This week brought both anxiety and discouragement to the markets.  Today is particularly awful.  However, what drives optimism is the continuing recovery.  Lost in the coverage of war and interest rate changes, is the fading of Covid 19. Numbers are looking great in North America, yet China is shutting down due to the weakness of their vaccines.

The housing market forecast is dampening with the mortgage rate rises.  with strong price growth forecasts, and more construction is expected. Some advisors are bullish on housing construction stocks.

Best Performing Stocks

Energy stocks dominate the top Alpha performers of late, according to Barchart’s data.

See more on the best stocks to buy including oil and energy stocks.

best stocks
Screenshot courtesy of Barchart.com

Top Losing Stocks

Health, biotech, and other speculative stocks were hit hard again, and it’s been a repetitive fact for the last year. Investors in these stocks might be dreamers who may end up losing their savings.  Time to abandon ESG and other high cost dreamer stocks and into practical winners — oil stocks.  The numbers provided by barchart don’t lie.

Most investors want high growth stocks but it seems they’re taking a beating right now. This is where the buy the dip opportunity comes in. Smart investors are experts at buying the dip and many are waiting for May and June for profits to get rolling in again.  On a positive note, the travel market is heating up.

Investors are in volatile period and more are looking the best stock market forecast for insights and guidance.   See the 3 month, 6 month, 5 year and 10 year outlooks for ideas.

Top Recommended Stocks This Week

Looking for the latest stock prices and best stocks to buy for next week?     Energy stocks are the darlings now. The Russia situation, Venezuela production problems and fast rising demand for summer travel across the northern hemisphere will keep oil prices rising. Biden could unleash another release and cause a dip, but that would only create a grand buying opportunity for bargain hunters.

Projections of oil prices are up to $200 a barrel because of supply shortages (exploration and drilling were discouraged/prevented in the US) so that political choice is coming home to roost this year. Look at Highpeak Energy Inc, Athabasca Oil Corp, Exxon, Marathon, and any of the best Canadian oil stocks.  The Canadian suppliers are getting paid in US dollars, with Canadian lower production costs.  This is a powerful producer of profits. Athabasca Oil Corp has an astonishing P/E ratio of 3!  Compare that to Goog’s 21, or APPL’s at 25.7. No point in buying Fangs, when these companies offer you astonishing returns.

Forecasts 3 Months to 10 Years

If the US government and GOP stay calm, we’ll only suffer a slow 3 month period this spring and then back to moderate races for the next 6 months, next 5 years and next 10 years. Remember, if the Republicans win the November elections, they will likely lower taxes which will stimulate the economy and business sentiment. This could prevent a stock market and housing market crash.

The forecast for Monday opening and next week is to the downside.  Futures were down today. Earnings reports are still coming in stronger than predicted, for most stocks anyway.

Stock Market Crash Possibilities

Combine the unsettled activity this week with lower consumer confidence, debt ceiling issues, war, persistent inflation, high energy prices, out of reach housing prices, fears of rising interest rates, reduced Fed spending, and a prolonged pandemic slowdown, and you can understand why markets might sag. The wind is definitely out of the sales and consumer intent is not strong.

However, predictions still say 2022 will be a good year. The pandemic ruined the 2019 party, but it will disappear globally late.  There still is time buy this dip and find the best stocks to buy.  Check out the Dow Jones, S&P, and NASDAQ posts for opportunities, and discover more about Bitcoin, Tesla,  Apple, Oil stocks, and the 2022 best picks page for more great stocks to buy. Meta is a washout and may never recover.

Although markets sprung back from the recent dip, there is plenty more volatility coming in the next 6 months. October is often a bad month, but again, it creates buying opportunities. So, for smart investors, it’s more like a feast!

What are the Biggest Threats to the Stock Market?

Stock market investors and those invested in  real estate stocks are trying to visualize the key threats that might cause a lot of pain. If you read the stock market crash report, you’ll get a good look at all the crash signals and factors that may lead to big investment losses.  Pay attention to those stocks that might be good hedges against a correction or downturn and which securities you should not buy.

Will There Be a Stock Market Crash?

Within a realistic outlook, a stock market crash seems unlikely, however you should still be up on all the factors as they change and combine to present threats to the markets.  Choosing stocks that will survive a crash is good and you should know more how to hedge a crash as smart management of your IRA, 401k or RRSP.

Predictions: As for today and tomorrow, next 3 months, next 6 months, or next year, the outlook is positive but maybe not to the satisfaction of some investors. With such bubbly activity, the worry is a high speed wobble (volatility) and a crash of the stock markets, and perhaps even crashing the housing market. This turbulence will reach the housing market and encourage homeowners to sell their house fast.

Retail sales rose only .9% in April, so it looks like the great overheating is overdone. GDP for the first quarter was down 1.4%.  However, according to BEA, personal income increased$268.0 billion in the first quarter and disposable personal income increased $216.6 billion, or 4.8 percent, compared with .4% from the previous last quarter of 2021. But will consumers save the stock market and economy in 2021?

I said there was a lot of phoniness in this market with Tesla, Bitcoin, Dogecoin, AMC and other stocks flying high. Now in May, it looks like this was very accurate.

Which are the best stocks to buy today/tomorrow or in the next 6 to 9 months?  Which will be hottest stocks during the coming fall season?  There are other stocks not reflected in today’s hot Wtd Alphas but will perform well in 2022.

Looking for good stocks to buy? See more on 5G stocks , FAANGs, top stocks for your 401k investment. See more about Google stock price Apple Stock price Facebook stock price , and Amazon stock price.

Inflation a Continuous Threat?

Governing politicians and other “experts” told us inflation is transitory. However the charts tell us it is more persistent. They got that very wrong and therefore are unreliable as credible forecasters.

Growth in US Inflation rate, last 12 months.
Growth in US Inflation rate, last 12 months. Screenshot courtesy of TradingEconomics.

As I said during the pandemic, trillions in government spending and low interest rates continuing, along with supply chain bottlenecks, is a fertile ground for record breaking inflation.  And here we are now with 8.3% inflation. Yet with EU sanctions on Russian oil, we might see inflation push upward toward 10% in May and June. Economic recovery during the second quarter into the summer will see consumers getting very active.

“With the economic outlook brightening, Covid-19 cases falling and more fiscal stimulus on the horizon, nervousness about inflation is percolating. That means pricing power is set to become an intriguing alpha generator due to the wide variance in how companies cope with it” according to Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist.

You should be hedging your investments with good stock selection. Charlie Munger says diversification is for idiots.  Pick the best horses to win.  Everyone seems to believe inflation is going to be an issue for the economy and for listed companies. Here’s a few stocks CNBC/Insider Monkey believes will weather the inflation storm:

  1. Newmont Corporation (NYSE: NEM)
  2. AT&T Inc. (NYSE: T)
  3. Medical Properties Trust, Inc. (NYSE: MPW)
  4. Dollar General Corporation (NYSE: DG)
  5. Activision Blizzard, Inc. (NASDAQ: ATVI)
  6. Etsy, Inc. (NASDAQ: ETSY)
  7. Philip Morris International Inc. (NYSE: PM)
  8. Oracle Corporation (NYSE: ORCL)
  9. Colgate-Palmolive Company (NYSE: CL)
  10. Adobe Inc. (NASDAQ: ADBE)
  11. The Procter & Gamble Company (NYSE: PG)
  12. Aspen Aerogels, Inc. (NYSE: ASPN)
  13. Zoetis Inc. (NYSE: ZTS)

3 Month Market Forecast

See more on the new outlook for April May June .  Strong economic performance was expected for the summer and fall season of 2022.  Recent Covid troubles in China, the Ukraine War, and rising rates are thwarting progress.  The summer should see strong inflation, but we wonder if the US Fed is willing to make another 50 point rate hike in June.

Factors affecting the Stock Market

  • economy had a meager showing in the last 6 months, GDP shrunk in last quarter
  • inflation rises rapidly and will persist despite Fed rate increases
  • rising rates are discouraging lending and investment
  • bond and treasury rates will may money out of equities (5 year outlook)
  • US dollar rising fast which hurts US exports
  • summer season pushes demand for travel, gasoline, and food even higher
  • rent prices rising putting extreme pressure on American consumers
  • markets sagging with increased volatility which scares off investors
  • price earnings ratios suggest stocks are grossly overpriced
  • Fed said they wouldn’t raise rates until 2023 but that’s changed
  • $5 trillion sitting in money markets and where will it go (oil and energy stocks?)
  • Oil prices rising which means higher gasoline prices and transportation and manufacturing costs
  • S&P, and Dow Jones, NASDAQ and Russell 2000 still have room to grow
  • jobs reports okay but not great

5 Year Long Term Forecast is Optimistic

Just a little discussionfs on the 5 year stock market forecast (and 5 year housing market forecast ) look really good too because the American consumer is well employed as business is rebuilt from the ground up. The ten year outlook is more clouded, but millennials will need products for some time.  Then intent to buy homes remains strong and construction rates will grow fast through the coming spring as labor and supply shortages ease.

The latest US jobs report is good. The 2022 to 2027 5 year projections are not priced into the market, but instead are focused on current earnings/sales and wishful thinking over the 5 year term.

Bank and Broker Forecasts

Goldman Sachs is forecasting recessionary numbers with a new GDP growth projection of a weak 1.75% with a 35% chance of a recession.

Final thought?  2022 looks really good, but if global markets crash due to lingering Covid infections, a stock market crash and housing market crash would be simultaneous. Optimism is a great catalyst, but you can see how periodic reality reaches the investor masses once in a while. Let’s cross our fingers for smooth sailing ahead.

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See more forecasts on the real estate housing market, and the latest home prices and sales trends for numerous major metros in California including San Diego, Los Angeles, San Francisco, and Sacramento.  See stats on other cities, including Denver, Dallas, New York, Boston, Atlanta and in the Florida housing market in Miami and Tampa.  Visit Linkedin if you’re seeking advanced SEO and real estate marketing services for Fintech or Real estate firms.

Rising mortgage rates, inflation, reduced housing supply and high home prices threaten the markets, it appears 2002’s real estate scene will stay strong. Realtors may want to build their presence this year as house prices decline in 2023. Lower prices will bring plenty of homes onto the market and boost your opportunities.

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