Yesterday I asked my the members of my Facebook group what was on their minds as we head into the last quarter of 2013. Overwhelmingly, they wanted to know what my stock market projections are for this fall.
After all, November and December and typically two of the best months out of the year for Wall Street. But with the Dow and S&P 500 breakings new highs as we speak, how far can the market go this fall?
And it’s not just my Facebook followers who are wondering this. I received similar question in a recent Live Event for Platinum Growth Club as well as at my free seminars. It makes sense that investors want to know what’s coming so that they’re not the last ones left at the party after it’s ended.
So let’s take a moment to address this question which seems to be on everyone’s minds.
Is the momentum going to end this fall? Not from where I’m standing. There’s still a lot of cash on the sidelines. As I mentioned in a recent blog post, a spike in interest rates pushed many traditionally fixed-income investors first into the money market and then into the stock market—particularly high-dividend payers and blue chips.
And I expect these inflows to continue, like they did back in 1995. If you remember back then, interest rates also spiked, causing money to pour into the market. This sparked a big—beautiful, I’ll even say—rally that lasted through the end of the year.
I pointed out earlier that the 2013 stock market has tracked 1995 pretty closely this year. And that still applies, because the other piece to the puzzle is third- and fourth-quarter earnings. After a shaky second-quarter earnings season, I’m happy to say that the earnings environment is improving. The analyst community forecasts 15% annual earnings growth for the S&P 500 in the third quarter. I expect the market will move even higher on the heels of a strong earnings season, which kicks off on October 8 with Aloca Inc. (AA).
The bottom line is that I expect a great finish to the year. While the S&P 500 is up over 20% this year already, I expect that it will get its second wind and finish up as high as 24% to 26% for 2013.