3 Month Stock Market Outlook

As we entered the 3rd quarter of 2023, investors are torn between two tales. One of a market crash this year or next, and one of a new bull market that will take everyone to nirvana.

It’s likely these 3 months will continue strong for stocks because investor mood is positive, boosted by the belief that the rate hikes are behind us and the bull rally is not far off. The rally that’s taken place in the past 6 months is one strong signal of good times ahead.

Tom Lee of Fundstradt, hot off his accurate call of a 2023 rally, says

However, this month J Powell and Fed are talking further rate hikes and more balance sheet tightening.  The credit squeeze is starting to show up since the CPI and core inflation have come back down from those 2022 heights. Food, housing and services are the outliers that just don’t seem to be receding.

The 2023 Market Rally

Sometimes charts say more than any words can. We’ve had good momentum for 8 weeks now, even sweeping the Russell2000 upward. And on that topic, some well know investors are eyeballing the Russell 2000 for bargain, buy-the-dip stocks. There’s a dip coming, one way or another, but the small caps would offer a better long-term outlook. Any downturn event will make it a twice-in-a-lifetime opportunity.

Major markets last 3 months.
Major markets last 3 months. Screenshot courtesy of Google Finance.

And some forecasts from Refinitiv suggest the last quarter of 2023 will be great while others such as Michael Wilson of Morgan Stanley believe the recession has already started. If that’s the case, you’ll want to get acquainted with a recession hedging strategy.

Which stocks to Buy in July, August and September?

Here are Motley Fool’s picks for Q3:

  1. Etsy (ETSY)
  2. Pinterest (PINS)
  3. Block (SQ)
  4. Realty Income (0)
  5. MercadoLibre (MELI)
  6. Shopify (SHOP)
  7. Intuitive Surgical (ISRG)
  8. Walt Disney (DIS)
  9. Berkshire Hathaway (BRK.A)
  10. Amazon (AMZN)

Bloomberg Top Picks for Q3, 2023 (what do you think?)

  1. Adidas ADR
  2. Alphabet (GOOG)
  3. Bill Holdings Inc. (BILL)
  4. Cheesecake Factory Inc. (CAKE)
  5. Erste Group Bank (EBS)
  6. Givaudan (GIVN)
  7. Industrial & Commercial Bank of China (SHA)
  8. Intuitive Surgical (ISRG)
  9. KE Holdings (BEKE)
  10. Vinci (XPAR: DG)

The next quarter should still be positive for mega cap earnings but for small caps and the Russell, it’s definitely slow going. This is why more investors are seeking safety in the magnificent 7 stocks. Still, the lagging effects of high rates are kicking in already and at some point in the fall we’ll see stock prices begin to fall. Unemployment will rise and consumers’ dicey credit debt situation, plus student loans due, this fall will create some news.

Longforecast believes the Dow Jones will hit 3780, the S&P to reach 5300, and the NASDAQ will get to 17600.  They don’t see a downturn until next fall.

What has performed best in the previous 3 months, still might be a beacon for the best in Q3. Barcharts best shows some unbelievable results from a market that many thought would be in recession.

Top stocks Q2, 2023.
Top stocks Q2, 2023. Screenshot courtesy of Barchart.com

After you digest the immediate market conditions, you’re ready to move onto this 3 month forecast report. Then you can review the 6 month projections, 5 year and 10 year outlooks. Each tap into a different set of statistics, signals and factors.

What should you be Focusing on as You Get Ready to Buy the Best Stocks?

You’ll find some good ideas to start with below. Barchart provides a great charting tool and you can subscribe to use the stock screeners for $16.67 per month with their top package. You can monitor price trends and get info on company reports. They have their top recommended stock lists too, backed by data which shows some stocks with strong upward momentum. You’ll want to review Tesla stock soon given its strong production and earnings of late.

Momentum through this 3 month period is important because good companies have made their transition. Other investors including hedge fund managers see their earnings reports and price trends. The momentum then also suggests support by investors for these stocks.

This isn’t by the way, a recommendation of any particular stock, sector or index. You and your stock investing advisor must evaluate each carefully. This is just a pointer to help you find top value for your investment dollar. It’s not going to earn much in a savings account and you could get rich with the markets heading much higher over the next 5 years. Buy and hold. See more about the 2023 2024 2025 market projections.

American’s savings holdings are growing strongly according to the latest BEA reports which means even more money has poured into the money markets. And banks are not recommended as a safe haven for holding assets. The banking sector is a worry and banking stocks are very risky, even if some have jumped back recently.  For that reason, investors like yourself are wondering what you might invest in during this supposed dip in the markets.

Let’s assume this is a short dip before a rise (manufacturing is down, job growth subdued). Refinitiv’s reports a much stronger Q4 2023, and Q4 2024 which means your investment in stocks would grow. While your plans are for the 3 month time period, the real success is in a 5 year view.

Let’s beware of false profits pushed by the media. Morgan Stanley’s Mike Wilson predicted the stock markets would plunge by spring 2023.  Didn’t happen. And Wilson forecasts the S&P 500 will reach only 3,900 by end of next year, and low corporate earnings will cause it.  Consumers are hoarding cash, but if FED rates fall and mortgage rates fall, the economy has little to prevent it from roaring again. This is why the FED says inflation is sticky and they have to keep the brakes on.

David Kostin, Goldman Sachs equity strategist David Kostin has vacillated on his predictions of the S&P from 4300 down to 3600 and now back up to 400.  Honestly, the average Joe could forecast better than that.

For the next 3 summer months, consumer spending should rise as gasoline prices have fallen, and the latest job and wage reports are solid. Americans may not be travelling internationally nor buying foreign products with the low US dollar which as slipped to 101 on the index. That the US greenback buys less foreign goods and US manufacturers will find exports picking up.

When the FED rate falls, forward-looking investors will be moving their money to the stock market.

What to Look for in the Next 3 Month Period?

  •  the Fed will likely begin lowering bank rate by November
  • unemployment will rise slightly as multinationals layoff more workers
  • SMBs begin to fail because they can’t get credit and the summer rush ends
  • China continues to slowly open its economy thus buying more products/materials
  • corporate earnings reports will lower over the summer and into fall
  • oil prices will continue below $80 dollars a barrel (As Biden spills SPR oil onto the market)
  • The OPEC cartel will respond with big cuts to support oil prices (done)
  • US dollar may stay low for some time
  • American investors stay cautious for the most part
  • those investing are trying to pick individual stocks but how many winners will appear?

Crash/Deep Recession Forecast is Retired

Some talk about a housing crash and a stock market crash, but with so much money and consumer demand present, investors and buyers may buy these assets as they become cheaper — especially if they believe the one year, 3 year and 5 year outlook is okay.  That means prices won’t go down.  Wages are strong right now and the economy looks okay.

Here we’re investigating the importance of the 3 month to 6 month forecast period. And this period will help us understand where the markets will be in the next 5 years.  Longforecast believes we’re in a sour period, and so far they’re right.  They believe markets will soar in 2023. They see the Dow, S&P and NASDAQ all soaring by mid 2023.

More predictions and stats: Definitely check out the general stock market outlook, the outlook for 2022, next 6 months, next 10 years, and find the best stocks to buy here on the stocks blog.

Top Stocks Recently

And let’s continue with these high performers with last month and last 3 month price performance.

Top stock price growth 1 month to 3 month.

Here are the top stock pick recommendations from Barchart. Outstanding performance!

Most Recommended stocks. Screenshot courtesy of Barchart.
Top recommended stocks on Barchart. Screenshot courtesy of Barchart.

The key factors in the next 3 months are:

  1. flat oil and commodity prices
  2. flattening Fed interest rate signals the worst is now over with crushing rates
  3. Europe has turned the corner and has dodged its energy crisis
  4. slow growth in China depresses investment Asia, which means more interest in the US
  5. employment rates begin to fall and wages start to turn downward
  6. corporations slimming down to achieve impressive levels of efficiency draws investments from the money markets which will see diminishing returns

Good luck with your quest to find the best stocks to buy. This 3 month’s of market volatility will provide some low points for you to gain the best possible returns. The 5 year outlook ensures at some point, you’ll be selling at a huge profit. The future looks good!

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