Tom Lee mentioned Monday he expects the inventory market’s robust begin to April to proceed all through the month as a part of what he’s beforehand dubbed a “face-ripper rally.”
The co-founder of Fundstrat Global Advisors made his case in an interview on CNBC’s “Fast Money,” following the S&P 500‘s 1.4% achieve Monday to notch a record close of 4,077.91.
“Institutions raised virtually $200 billion of money for the reason that begin of the 12 months, in order that they’ve turned fairly cautious, and so they’ve been fading or promoting their tech and progress holdings however they’ve solely simply begun to nibble on the … epicenter [stocks],” mentioned Lee, whose agency considers these to be corporations that have been among the many hardest-hit in the pandemic however stand to achieve from the financial restoration.
“So, I feel there’s a degree of shock coming in April as a result of we already had a robust end starting Wednesday of final week. It’s actually three days of robust rallies and historical past exhibits that is actually constructing as much as be what may very well be a, probably, S&P 4,200 earlier than the tip of the month,” Lee mentioned.
The broad fairness index reaching that degree would characterize roughly 3% upside from Monday’s shut.
Additionally, Lee mentioned it might make the April rally “one thing that’s each actually robust however, extra importantly, fairly a huge shock for establishments.”
As for what occurs after a so-called face-ripper rally, Lee mentioned there may very well be a interval of uneven buying and selling.
“I feel if the S&P does in truth rally strongly this month at a time when establishments are sitting on a lot money and there is a lot skepticism on this market, we might see a huge chase and that would mark the excessive for the 12 months,” he mentioned. “I would not say that is our base case, however sure, we must consolidate these good points.”
