Fundstrat’s Tom Lee explains why he expects a face ripper rally in April
Tom Lee said Monday he expected the stock market’s strong start into April to continue throughout the month as part of what he previously referred to as the “face ripper rally”.
The co-founder of Fundstrat Global Advisors made his case in an interview on CNBC’s “Fast Money” after the S&P 500 rose 1.4% on Monday to hit a record high of 4,077.91.
“Institutions have raised nearly $ 200 billion in cash since the start of the year. So they’ve gotten pretty cautious and faded or sold their technology and growth stocks, but they’re just getting started, to the … epicenter.” [stocks]”said Lee, whose company views these companies as those companies hardest hit by the pandemic but who can benefit from the economic recovery.
“So I think there will be some surprise in April as we already had a strong finish on Wednesday last week. It’s really been three days of strong rallies and history shows that this really turns out to be a potentially possible event S&P 4,200 before the end of the month, “Lee said.
The broad stock index hitting this level would represent an uptrend of around 3% from Monday’s close of trading.
In addition, Lee said this would make the April rally “something that is both very strong and, more importantly, a big surprise to the institutions”.
What happens after a so-called face ripper rally, Lee said there could be a period of troubled trading.
“I think if the S&P does make a big bounce this month, at a time when institutions are so bogged down and there is so much skepticism in this market, we might see a big chase that highs for could mark the year. ” he said. “I wouldn’t say this is our base case, but yes, we need to consolidate those gains.”