Longtime market bull Tom Lee predicts a profitable period for investors in September.
According to Lee, the S&P 500 is in a position to climb more than 100 points this month. However, he cautioned that the positive momentum has an expiration date.
“We could have a very strong recovery in September,” the co-founder and head of research of Fundstrat Global Advisors told CNBC’s “Trading Nation” on Friday. “We didn’t think there was a window for a 10% correction for most of 2021. The window from which we think you can potentially start a 10% withdrawal is October.”
Lee attributes the vulnerability to increased fiscal and monetary policy risks, as well as the uncertainty surrounding the pandemic and flu season.
“We take it very close to the recording,” said a CNBC contributor. “This is really when the debt limit rhetoric returns, and if there is any concern about the debt limit, the bond market can panic.”
When there is volatility in the bond market, it usually spreads to stocks. But in the meantime, Lee has hinted that he will be a buyer.
He sees the uncertainty over the delta cases of Covid-19 and its economic impact prompting the Federal Reserve to stay longer. According to Lee, it’s a recipe for new heights in the market.
“The United States is still in an underlying expansion. It’s a risk on the formula, ”said Lee, who led equity strategy for JPMorgan Chase from 2007 to 2014.
He cited as evidence a return in the price of crude oil and a return of over $ 50,000 for bitcoin.
Lee’s primary market still includes transactions related to economic recovery. He particularly likes energy and materials. He also sees opportunities in FAANG stocks, otherwise known as Facebook, Amazon, Apple, Netflix, and Alphabet.
“I estimate that a significant number of investors thought we would have a 10% correction in August,” said Lee. “So the money was taken off the table. Usually when people take risks, they start buying cyclical ideas and epicenters. “
Lee believes the S&P 500 could surpass 4,650 in September, 50 points above its year-end target. The index closed at 4,535.43 on Friday and is down almost a quarter of a percent from its all-time high.
Disclosure: Tom Lee is the owner of Bitcoin.