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Investors suffered through a brutal month of September in which the SPDR S&P 500 (NYSE:SPY) dropped more than 4%, its worst month since March 2020.

September has historically been the worst month of the year for the S&P 500, but the fourth quarter of the year has historically ushered in the best returns of any quarter of the year, according to Jeff Buchbinder, Equity Strategist for LPL Financial.

Favorable Environment: This week, Buchbinder took an early look ahead to 2022 for investors and said there’s plenty of room for additional market upside over the next five quarters.

“We see a favorable economic environment for stocks in 2022, consistent with prior mid-cycle expansion years and bolstered by continued earnings growth. The gains may not come easy, however, with a number of risks such as COVID-19-related supply chain disruptions, inflation, and higher interest rates,” Buchbinder said in the report.

Related Link: Just How Bad Was September For The Stock Market?

Earnings Outlook: Buchbinder believes the stock market is approaching the middle years of an economic cycle, suggesting a few more years to go before the current growth period starts to slow significantly.

If that forecast is correct, the chances of 2022 producing more gains for investors is extremely high based on historical precedent. In the last 50 years, the S&P 500 has averaged a 12% annual gain during midcycle years and has traded higher 81% of the time.

Unfortunately, Buchbinder said the likelihood of a big return next year is relatively low given the market has already roughly doubled since its March 2020 lows. LPL is projecting $218 per share in S&P 500 earnings in 2022, but Buchbinder said the upside or downside of that 6% growth projection will likely go a long way in determining just how much higher the stock market pushes next year.

Benzinga’s Take: If you’re a long-term investor, buying the September dip was likely the best response to the market weakness. But if you’re a shorter-term trader, the upcoming earnings season could certainly send the market lower if the third-quarter numbers and fourth-quarter guidance fall short of expectations.