Tom Lee, Fundstrat’s Head of Research says that the stock market has entered a rally of “most disliked”, with investors holding on to the reasons for why they think the market will fall.
Lee, in a recent update, says that he thinks the S&P500’s current rise, where it has risen by 17% since its lows, is a strong but underestimated rally.
Part of the [bearish] sentiment is understandable. “We had a black-swan event (meaning an unexpected event) on post tariff liberation day and we saw a fall of 20% in stock prices in a short time .”
Lee cites historical examples where doubt following a stock market crash led to massive rallies.
When stocks started to rise after March 2020, fund managers claimed that we were still in a down market.
In the fall of the year 2022 when the market had reached its lowest point in October 2022, many investors said that it was just a bear-market rally. They were about to commit a grave error…
Investors turn bullish the moment you reach a new high. In other words, after a fall in the market investors tend to fight. The investors will fight until the new high is reached. They turn bullish at a high and that is what I expect to happen when the markets reach a high.
Lee believes that Bitcoin’s all-time record high of $111,000, which was reached a few weeks before S&P’s peak in November 2017, is another indicator. This is because Bitcoin topped out a little over a month earlier than the S&P and both are tracking an increase in global liquidity.
Lee is unsure if the downgrading of US Government debt by Moody’s from AAA to A1 will have a negative impact on markets. He points out that S&P downgraded US government bonds in 2011, and Fitch did so in 2023.
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The post Tom Lee of Fundsrat’s Tom Lee: ‘Most Hated’ Market Rally is Officially Underway – His Outlook’ may be updated as new information becomes available.
