Stock Market Forecast for Next 3 Months

3 Month Stock Market Outlook

The last 3 months have seen the indexes slide considerably, and more of a dip is expected before improvement in the spring. Risk right now is elevated.  Mix in wild volatility and you have a context that even the experts are having harsh words over.

I’ve never seen the top advisors getting into heated exchanges about stocks like they have lately (other than before the last crash in 2008).  It shows they’re uncertain and their forecasting tools are working well.  They’ve been uneasy about making predictions.  And these aren’t technical factors that drive the daily market price swings. They’re based on people such Putin making reactionary decisions and threats.

Apparently, the Putin government just launched threats toward Google executives so the nature of this Russian war is showing new dimensions that raises sentiment against risk. Combine the rising interest rates, reduced spending, and high inflation, and the next 3 month stock market period could be rougher than we anticipate.

This will affect investors view of the value of the stock market and any high flying stocks they might buy.

Experts today were reiterating 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. Could be they’re expecting political change.

Every 3 months, the outlook for US stock markets looks different.  Interest rate fears, earnings reports, inflation data, and the receding pandemic create a new look.  It’s a time of great change and as the picture changes, so does investors and consumers attitude and perceptions. Investors are looking for growth but at what risk?  Certainly oil stocks are worth buying, but the best stocks might be in US producer stocks which are raging hot right now.

2nd Quarter Might Be Better Than Expected

Russia blockades mean more demand for US products including oil and gas.  That sector’s up about 50% since I suggested investors take a good look. In the 2nd quarter of 2022, oil and gasoline should be soaring to new record prices. The outlook for the energy stocks is even better given Russia’s supply (and Iran’s) could be shut out.

Some politicians and others believe Saudi Arabia will flood the market and destroy the price, but they’ve never done that except to crash the US economy.  Flooding the markets would only accelerate US economic output. Biden does not look like he will support US oil production, so supply will be an ongoing factor beyond the next 3, 6 month period and into the 5 year outlook. Only an induced recession can end the parade.

Wise investors who know what interest rate rises mean, no doubt have the finger on the sell button. There’s a lot of nervousness with big fund managers too as they have a lot to lose in a volatile environment with a nuclear power making threats.

Dangers and Risks in the Next 3 Months

Besides  war, the dangers are overreacting to inflation by the Fed. All recessions begin with rising rates. During the next 3 months, stock market investors will have to choose between energy stocks, consumer discretionary (travel stocks) and materials.

US government will be testing the waters to see what business and the public will tolerate. A 100 point increase in the Fed rate could send the housing market and stock market downward. In order to suppress inflation, the housing market could get sacrificed.

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.

Take a closer look at the top performing stocks in the last 3 months.  It is loaded with oil stocks.  Oil and energy stocks will only increase in profitability and the only thing that could stop that profit parade is a recession.

Stocks best performers last 3 months.
Stocks best performers last 3 months. Screenshot Courtesy of Barchart.

However, we’re not quite to the projected 3rd quarter yet and that uncertainty is what’s coloring the next 3 months until spring. Supply chain shortages, Russian war threats, China conflict, rising inflation, Fed spending cessation, energy regulations, and US government in fighting are definitely issues.

If we’re in the bottom of the sell off trough, then this might be an ideal buy the dip moment. Or the worst may be yet to come.  The really bad news may be international just ahead, and could hamper the full recovery. Experts feel the next 3 months will be stagnant and flat, and at best a buy opportunity.  However, we’re into a phase where investors have to pick winners, and most will not do well picking horses.

For sure, avoid Bitcoin (pending regulation) and look into buying oil stocks. The oil price forecast is for continuous $100+ price levels which makes oil companies very lucrative for investors. In particular, review the Canadian oil stocks whose companies have been suppressed for many years. They’re going to get full price again. Big fund managers will not be able to ignore oil, and will flow investment back into that sector.

Oil and Energy stocks have outperformed every other S&P sector.

Top Performing Oil Stocks last 3 months
Top Performing Oil Stocks last 3 months. Screenshot courtesy of Barchart.

The Next 3 Months

March, April and May are transition months. As more US workers return to work and small businesses reopen and travellers begin their journeys, it will deliver a big stimulus boost to the economy. No further stimulus is necessary right now. As supply chains begin flowing, the CPI rate will moderate.

Most models see the stock markets falling right into the 2nd quarter before recovering in the second half of 2022.

Stock Market Forecasts. Screenshot courtesy of Tradingeconomics.

The markets have been volatile so investors are confused and jumpy at the first signs of trouble or negative news. the erratic and panicky trends are a warning of the mood. Last Monday’s bizarre 1000 point drop and then recovery in a couple of hours may provide enough evidence to investors to stay out of the market for a while, or to sell stocks and come back in, in 6 months time.

The next 3 months could see more big corrections.  Jobs reports should be okay, but we have to remember that without the record multi-trillion stimulus, the stock market bubble and housing market bubble can stay inflated like they were.

The 3 month outlook for oil stocks and other energy equities is positive.  The US domestic market is crushed, leaving the US open to foreign predatory monopolies such as OPEC+.  High energy prices will put a huge drain on the economy and make commitment to alternative energy weak.  Those who have sunk billions into alternative energy projects will find them in peril by 2023.

The 6 month stock market outlook is better. The Demos will need this much time to get their big stimulus spending event rolling. By April, it will be rolling. By November 2022, the win by the Republicans in the mid terms will change the outlook. The hopes of big, outlandish, unaffordable spending will be dashed.

The big 2023 event ahead is all about reality — that time when Americans come back to earth and realize the idea of $3.5 trillion spending didn’t solve the country’s fundamental problem about making things in America and not importing what it can’t afford. That’s when everyone pulls back and we’ll see some severe drops in stock prices and in home prices too.

Covid isn’t the issue anymore. It’s sky high prices for everything including houses.

Small business isn’t doing well, and gig economy workers will likely be jettisoned quickly when things go sour. October represents that negative beginning.  This 3 month to 5 month downturn will of course lead to another big upward swing as the stimulus money finally flows. Big companies will be able to ride this 3 month dip out. You’ll want to check out the best post pandemic stocks to buy.

Yes, real estate is still a good purchase. Not even China can manufacture land.

Keep in mind that the end of Covid finally celebrated next March, will be an uplifting joyous event. We have vaccines and even new Covid pills that will reduce death significantly. And recent reports suggest our vaccines will last a long time. All very good news. We need more good news!

The Political Underpinnings of the Correction

This 3 month stock market forecast comes with the severe conflict between the two opposing parties on the matter of uncontrolled spending. This is debt that can’t be repaid. As a consumer, this type of behavior is illegal. Conservative Demos and Republicans both are balking on combining infrastructure and debt emergency spending.

They want money anyway they can get it to keep the spending theme going. They want to implicate the Republicans who refuse to be pulled into the mess. This struggle is severe and the first big emotional event will happen this month. Anger is high.  Just the fact the Republicans refuse is sufficient warning about 2023.

Quite a few of the Demo’s economic tactics are beginning to crack: alternative energy, uncontrolled immigration, deficit spending, high taxation, and Fed raising the interest rates ahead all spells trouble.  This correction is a realization by Americans and the world about the competence of the Dem party.

Looking at the Russell Index and Small Caps

Small caps aren’t even on the radar as investors look to large stocks on the S&P and Dow Jones indexes. However, as this Yahoo Finance chart reveals, the real value of the stocks is showing through.

Could we see a stock market crash sometime this summer?  In many ways, the economy is a house of cards so concerns of corrections and crashes aren’t ludicrous.  Few people foresaw any of the recent stock market crashes.  Some were calling for a dramatic fall because they are way over-priced based on real earnings.

We’ve had a few volatile correction periods, but as we get closer to full Corona Virus vaccine distribution, you have to think the upward momentum will really pick up by 3 months from now when investors really believe the end of the pandemic is in site.

Record New Highs Called

The stock market for the next 3 months should rise continuously, to new highs. It looks like fundamentals are beginning to drive stock prices higher. Of course, next week’s earnings reports will give a clearer picture. Goldman Sachs earlier predicted an 18% drop in the markets in the next 6 months, but revised it after the S&P surged. Live and learn.

The markets have excelled during the pandemic, not as a response to billionaire wealth, but rather to the hope of the new United States. The Dow, S&P and NASDAQ have grown 15% over the last 3 months. Stock market experts expect stocks prices to plummet but they’ve forecasted this before.

Next 6 Months

The stock markets will benefit from the recovery in the next 6 months, and are already surging.  November is a good month and this one will be too. Globally, issues of supply shortages will raise the value of commodities. Oil and natural gas prices are rocketing.

But now that Americans are returning to work and seeing clearly why a pro-American agenda is correct, we’re betting that US companies are going to soar.

The key factors in the next 3 months are:

  1. easing Covid pandemic opens summer of calm
  2. rising oil and commodity prices
  3. threat of rising Fed rate and uncertainty about inflation fundamentals
  4. war in Eastern Europe
  5. hard working entrepreneurs back to work
  6. work at home still a thing
  7. employment rates soar further
  8. wages and inflation put pressure on earnings performance

See more stock market predictions  and what’s in store for Bitcoin stocks, Oil stocks, Facebook, Tesla, Google, Amazon and Apple.  See the latest Facebook stock price, Google stock price and Tesla stock price quote.  Do you use Google finance or Yahoo finance for fast stock quotes and news?

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