Tom Lee said Monday that he expects the strong start to the stock market in April to continue throughout the month as part of what he previously called a “heartbreaking rally.”
The Fundstrat Global Advisors co-founder made his case in an interview on CNBC’s “Fast Money,” following the S&P 500’s 1.4% gain on Monday to record a record close of 4,077.91.
“Institutions have raised nearly $ 200 billion in cash since the beginning of the year, so they’ve gotten quite cautious and have been fading or selling off their technology and growth holdings, but have only just begun to nibble on the … epicenter. [stocks]”said Lee, whose firm believes that these are the companies that are among the most affected by the pandemic, but that will benefit from the economic recovery.
“So I think there is a level of surprise in April because we already had a good finish starting on Wednesday of last week. It really is three days of strong rallies and history shows that this is really preparing to be what it could be. potentially S&P 4,200 before the end of the month, “Lee said.
The broad equity index reaching that level would represent about 3% up from Monday’s close.
Furthermore, Lee said he would make the April rally “something really strong but, more importantly, a big surprise for the institutions.”
As for what happens after the so-called face-wrenching rally, Lee said there could be a period of choppy trading.
“I think if the S&P does indeed rebound strongly this month at a time when institutions are sitting with so much cash and there is so much skepticism in this market, we could see a lot of persecution and that could mark the high of the year. . he said. “I wouldn’t say that’s our base case, but yes, we would have to consolidate these gains.”