Fundstrat’s Tom Lee Issues Stock Market Alert, Says Equities Now Overbought and Vulnerable to Bad News Stories
Hedge fund veteran Tom Lee says the inventory market is buying and selling above its truthful worth and will witness an abrupt correction.
In a brand new CNBC interview, the managing accomplice of Fundstrat World Advisors says the inventory market is flashing a bearish sign after rallying almost 20% inside 4 months.
Whereas Lee says a market pullback is inside the realm of risk, he believes the correction doesn’t essentially imply that the longer-term uptrend is over.
“The market’s positively overbought. We’re 13% above the 200-day shifting common. Prior to now, that’s an indication of a powerful market, however it’s also a market that’s weak to unhealthy information.
I’m form of sympathetic to the view that there are indicators of a correction… However on the flip facet, I believe there are too many who’re rapidly calling this the highest. That places me within the camp that no matter weak spot we have now could find yourself proving to be shallow.”
Lee additionally says that any correction will probably be a section of market consolidation the place traders rotate their capital to different shares which have but to have a serious transfer this yr.
“I believe profit-taking is wholesome as a result of that’s going to be a part of the investor mindset. Buyers who’ve been concerned with tech and FAANG (Fb, Amazon, Apple, Netflix and Google) are having fun with fairly stupendous returns year-to-date. Now, it doesn’t imply that once they take income, they need to essentially exit the markets.
To me, subsequent week… if the Fed surprises us in a manner as a result of it’s extra of a dovish pause, I believe traders are going to search for methods to search out shares that rise on easing monetary situations. They could not come again to the FAANG. They may stick to tech, however they could broaden out to industrials and financials.
So sure, profit-taking, however it doesn’t imply the market has to go down.”
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