Tom Bull, a long-term market maker, predicts a profitable period for investors in September.
According to Lee, the S&P 500 is positioned to rise more than 100 points this month. However, he warns that the positive momentum has an expiration date.
“We could have a really strong concentration in September,” he told CNBC’s “Trading Nation,” the co-founder and head of research at Fundstrat Global Advisors. “We didn’t think there was a window for a 10% correction for most of 2021. The window where we think you could start to have a 10% decline is in October.”
Lee attributes the vulnerability to the growing risks of fiscal and monetary policy, as well as the uncertainty surrounding the pandemic and flu season.
“We’re getting much closer to volume reduction,” the CNBC contributor said. “It’s really when the debt ceiling rhetoric returns, and if there are concerns about the debt ceiling, the bond market may panic.”
When there is a disorder in the bond market, it is usually poured into stocks. Meanwhile, Lee indicates he would be a buyer.
He sees the uncertainty over the Covid-19 delta cases and their economic impact pushing the Federal Reserve to stay longer for longer. According to Lee, it is a recipe for new market highs.
“The U.S. is still expanding underlying. That’s a risk on the formula,” said Lee, who led the equity strategy for JPMorgan Chase from 2007 to 2014.
As proof, he cites a return to the price of crude oil and the return of Bitcoin above $ 50,000.
Lee’s best market options continue to involve operations more tied to economic recovery. He especially likes energy and materials. He also sees opportunities in FAANG shares, also known as Facebook, Amazon, Apple, Netflix and Alphabet.
“I think a lot of investors thought we’d have a 10% correction in August,” Lee said. “So the money was taken off the table. Normally, when people take risks again, they start buying cyclical and epicentric ideas.”
Lee believes the S&P 500 could surpass 4,650 in September, 50 points above its year-end target. On Friday, the index closed at 4,535.43 and is about a quarter of a percentage point below its all-time high.
Disclosure: Tom Lee owns Bitcoin.
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