Tom Lee stated Monday he expects the inventory market’s sturdy begin to April to proceed all through the month as a part of what he is beforehand dubbed a “face-ripper rally.”
“Establishments raised virtually $200 billion of money because the begin of the 12 months, in order that they’ve turned fairly cautious, they usually’ve been fading or promoting their tech and development holdings however they’ve solely simply begun to nibble on the … epicenter [stocks],” stated Lee, whose agency considers these to be corporations that had been among the many hardest-hit within the pandemic however stand to realize from the financial restoration.
“So, I believe there is a degree of shock coming in April as a result of we already had a powerful end starting Wednesday of final week. It is actually three days of sturdy rallies and historical past reveals that is actually constructing as much as be what could possibly be a, probably, S&P 4,200 earlier than the top of the month,” Lee stated.
The broad fairness index reaching that degree would signify roughly 3% upside from Monday’s shut.
Moreover, Lee stated it might make the April rally “one thing that’s each actually sturdy however, extra importantly, fairly an enormous shock for establishments.”
As for what occurs after a so-called face-ripper rally, Lee stated there could possibly be a interval of uneven buying and selling.
“I believe if the S&P does actually 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 an enormous chase and that would mark the excessive for the 12 months,” he stated. “I would not say that is our base case, however sure, we must consolidate these positive factors.”