Stock investors are staring down a bearish trifecta that could spark a 12% market drop by October, strategist says

Stocks could see a double-digit correction within the next three months, according to a veteran strategist.Getty Images; Jenny Chang-Rodriguez/BI

Stocks could see a double-digit drop by autumn amid a trifecta of headwinds, according to Bill Blain.

The veteran strategist said stocks are overvalued and face risks from higher rates and the election.

Blain isn’t touching Big Tech stocks and is only bullish on “boring” investments.

The stock market’s red-hot rally could sputter by the fall.

Bill Blain, the founder of Wind Shift Capital and a longtime strategist sees stocks tanking by 7%-12% by October.

The decline will be sparked by a trifecta of threats that’s been looming over the equity market for months, Blain said, suggesting that the run-up in stocks is approaching its upper-limit.

Signs of a impending correction are already in full-swing, Blain told Business Insider in an interview. Chip stocks tumbled this week after the Biden administration proposed tighter trade rules against China. The S&P 500 also struggled, with the benchmark index dropping 2% over the last trading week.

“All these things potentially configure a correction,” Blain said. “You can feel it in the market around you with a correction because, rather than tumbling off a cliff, you roll down a slope.”

That pullback could be triggered by a number of things: escalating geopolitical tensions, inflation treading higher in the economy, or an unpredictable Black Swan event. But the risks are so prevalent, a pullback will likely come by October this year, Blain predicted.

He’s steering clear of Big Tech stocks, and for now he’s only bullish on “dull, boring, and predictable” names. Blain added that he’s been scooping up gold and other commodities.

“I’m looking at fundamentals,” Blain added. “In times of crisis, there are always opportunities.”