Tom Lee said Monday that he expects the stock market’s strong start to continue through April throughout the month as part of what he previously called a “face-ripper rally”.
Fundstrat Global Advisors co-founder outlined his position in an interview on CNBC’s “Fast Money,” following Monday’s 1.4% gain of the S&P 500 to a record 4,077.91.
“Institutions have raised nearly $ 200 billion in cash since the start of the year, so they’ve gotten pretty cautious and are either fading or selling their tech and growth companies, but they’ve only just begun to nibble on the … epicenter [stocks]said Lee, whose company views these as being among the hardest hit in the pandemic but benefiting from the economic recovery.
“So I think there will be a level of surprise in April, because we already had a strong finish from Wednesday last week. It’s really three days of strong rallies and history shows that this is really building up to some potential. could be S&P 4,200 by the end of the month, ”said Lee.
The broad stock index hitting that level should be about 3% upward from Monday’s close.
In addition, Lee said it would make the April rally “something that is both very strong and, more importantly, a pretty big surprise to institutions.”
As for what happens after a so-called face-ripper rally, Lee said there could be a period of choppy trading.
“I think if the S&P does indeed rise sharply this month at a time when institutions with so much money and there is so much skepticism in this market, we could see a big chase and that could mark the high point of the year,” he said. “I wouldn’t say this is our base case, but yes, we should consolidate these gains.”