3 Month Stock Market Outlook

The Dow, S&P, NASDAQ and Russell2000 are all at historic highs, something many experts felt wouldn’t happen. But now the FED has spoken about a pivot and the year end rally shows that the next 3 months will be great for stocks.

As Tom Lee of Fundstradt Advisors said yesterday, analysts got it wrong about the rally. He consistently stuck to his late-year rally forecast of 4750 for the S&P, and there’s a possibility it will go beyond his projections. The 2024 stock market should be stronger than expected even with no Fed rate changes. Just the fact rates won’t go up is sufficient for investors to go bargain hunting.  Take a look at some good stocks to buy.

Have a closer look at some of the projections for the next 3 months, 6 months and 5 years and overall it’s an optimistic picture. See the 6 month economic projections to gauge macro concerns.  There’s plenty of demographic demand and a growing disgust with business over-regulation in the US. And in only 11 months, Americans have the opportunity to elect a new President. Biden is approaching a record low rating as President which means change is coming. And he’ll have to pull out free stimulus gifts and ease anti-business philosophy to get elected.  Election years are not too bad for that reason.

Inflation is falling, energy prices are down, rent prices are falling, and home purchases are set to climb painting a picture of higher economic activity.

This doesn’t mean there won’t be a temporary pullback or dip, however if that happens, it’s an opportunity to find some bargains. Look for opportunities such as Coinbase, Affirm, and Toll Brothers.

Investors poured $40 billion into stocks since Oct. 9 according to Bank of America.  There is still a massive amount of funds in money markets, but returns there will diminish as the economy picks up and rates drop.  As mentioned in the stock market forecast post, the momentum is high and factors signal price growth.

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.

How does the S&P Look Going Forward?

Longforecast is usually very optimistic and they see it heading up fast, to 5342 at the end of this 3 month period!

S&P forecast next 2 years.
Screenshot courtesy of Longforecast.com S&P forecast next 2 years.

Which stocks to Buy in December, January and February?

Yahoo Finance published their top stocks to buy and they include Microsoft Corporation (MSFT), Amazon.com, Inc. (AMZN), and Meta Platforms, Inc. (META), Salesforce (CRM), Activision Blizzard, Inc. (ATVI), Uber Technologies, Inc. (UBER), Apple Inc. (AAPL), Mastercard Incorporated (MA), Alphabet Inc. (GOOG), Visa Inc. (V), Meta Platforms, Inc. (META), Amazon.com, Inc. (AMZN), and Microsoft Corporation (MSFT).

Here are Motley Fool’s most recent picks:

  1. CrowdStrike (CRWD)
  2. PayPal (PYPL)
  3. MercadoLibre (MELI)
  4. Airbnb (ABNB)
  5. Shopify (SHOP)
  6. Intuitive Surgical (ISRG)
  7. Walt Disney (DIS)
  8. Berkshire Hathaway (BRK.A BRK.B)
  9. Amazon (AMZN)
  10. Alphabet (GOOGL -0.51%)(GOOG -0.45%)

 Morningstar’s Controversial Top Stock Picks

  1. Yum China (YUMC)
  2. Roche Holding (RHHBY)
  3. Pfizer (PFE)
  4. Estee Lauder (EL)
  5. Zimmer Biomet (ZBH)
  6. Imperial Brands (IMBBY)
  7. GSK (GSK)
  8. Campbell Soup (CPB)
  9. Corteva (CTVA)
  10. British American Tobacco (BTI)

Forbes provides some good consumer discretionary stocks to consider:

  1. Amazon.com Inc. (AMZN)
  2. Tesla Inc. (TSLA)
  3. Louis Vuitton SE (LVMHF)
  4. The Home Depot Inc. (HD)
  5. Toyota Motor Corp (TM)
  6. Hermes International SA (HESAY)
  7. McDonald’s Corp. (MCD)
  8. Nike Inc. (NKE)
  9. PDD Holdings Inc. (PDD)
  10. Starbucks Corp. (SBUX)

Barchart offers up 10 Promising Stocks in the Travel Sector:

  • (VIP) VIP Entertainment
  • (FANS) Fansunite Enter
  • (RV) Pathfinder Ventures
  • (PMKR) Playmaker Capital
  • (MAP) Maple Peak Investments
  • (PBL) Pollard Banknote
  • (TWC) TWC Enterprises
  • (GH) Gamehost
  • (GYM) TUT Fitness Gr
  • (POOL) Pool Safe

Let’s look back at which stocks have excelled in the last 3 months:

Last 3 months best performing stocks.
Last 3 months best performing stocks. Screenshot courtesy of Barchart.com

After you digest the immediate market conditions, move forward to the 6 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 and help you build a more comprehensive understanding of what’s driving the marke and which are the best sectors and best stocks to buy.

What to Look for in the Next 3 Month Period?

  •  the Fed won’t likely cut rates until June 2024
  • lagging effects of rate hikes continues to soften the economy and business spending
  • unemployment will rise slightly as multinationals layoff more workers
  • SMBs begin to ramp up in anticipation of credit availability and stronger consumer spending
  • China continues to slowly open its economy thus buying more products/materials
  • corporate earnings reports will likely deteriorate as consumer spending falls
  • oil prices will continue below $80 dollars a barrel, possibly plummeting to $30 in an OPEC price war
  • US dollar will begin to rise again by end of March
  • It’s risk on for investors who are confident that inflation has been beaten
  • AI, Pharma, industrials, and consumer discretionary stocks will grow strongly in spring

Stock Market Crash or Hard Landing Forecasts are Retired

Some still talk about a housing crash and a stock market crash, but with the rally going so strongly, inflation signals abating, and a FED rate hike likely in June 2024, the scene is set for growth.  There are risks with investors starting to go overboard with risky buys such as junk bond etfs.

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 growing by mid 2024.

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.

See more on the 6 month and 5 year forecast periods to round out your view of the investable future.

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