Analyst who predicted market’s 40% rally says these stocks will lead to all-time highs

- Advertisement -
- Advertisement -
- Advertisement -
- Advertisement -

When the stock market was in free fall back in March, Fundstrat Global Advisors founder Tom Lee made the bold call of a 25% rally by April.

He was right.

After that, he predicted a 50% recovery of the losses caused by the coronavirus pandemic would signal an “all-clear” that would accelerate gains to push the S&P 500 back near all-time highs. So far, he’s been right again and Friday’s surprisingly strong job report that showed U.S. payrolls unexpectedly added 2.5 million jobs in May has only fueled his bull thesis.

Now, Lee is doubling down on his call to continue leaning in on so-called “epicenter” companies, or stocks in consumer discretionary, industrials, and energy sectors that have been most beaten down to deliver the market to new highs.

“The market has moved with such vigor, but the economic data, maybe with the exception of today, has just been muddling and I think maybe today will be a call to action to get some money off the sidelines,” Lee told Yahoo Finance’s YFi PM, adding that he estimates the $5 trillion in money market dry powder will boost stocks further.

So far, his bet that this recovery would play out similar to the Great Recession in 2008 has proved true, with the hardest hit sectors recently showing the sharpest snap back. Casino stocks like Wynn Resorts, which rallied 20% this week alone, and energy names like Chevron, which rallied 10%, have well outpaced the overall market since the March bottom. Lee expects that trend to continue, if the market’s recent turn higher does indeed attract new money from the sidelines.

“I think that’s where the dry powder is going to go,” he said. “It’s going to seek cyclically sensitive stocks.”

Still a lot of risk

Lee conceded that certain epicenter stocks have seen recent rallies that could be indicative of speculative bets, including American Airlines which rallied 66% in the last two days after the company announced it would be flying more of its domestic schedule in July than in May (though still just half of its last year total.) As Bloomberg reported this week, the airline ETF JETS recently recorded 64 straight days of inflows, bringing assets from $33 million in March to more than $1 billion as its CEO credited the funding surge to “bored millennial day traders.”

This article was originally posted on finance.yahoo.com/news/.
Home of Science
Follow me

- Advertisement -

Discover

Sponsor

Latest

Edwin Poots resigns as DUP leader after 21 days in the jobon June 17, 2021 at 10:41 pm

His resignation comes following a meeting of party officers at the DUP headquarters in east Belfast.His resignation comes following a meeting of party officers...

COP 26: How much is the developing world getting to fight climate change?on July 26, 2021 at 6:25 pm

Are rich countries living up to their climate promises to the developing world?

BBC condemns online abuse of Six Nations reporter Sonja McLaughlanon February 28, 2021 at 12:40 pm

Online abuse sent to reporter Sonja McLaughlan after the live broadcast of Wales' Six Nations win over England is strongly condemned by the BBC.McLaughlan...

S&P 500 climbs above 2,900 as drug maker Gilead says trial for coronavirus treatment has met initial goal

Stocks traded sharply higher Wednesday as reports that a drug manufacturer’s clinical trial for a treatment to help patients recover more quickly from the...

What Happens When You Sell Your Startup?

Entrepreneurship is not just about starting businesses. Getting out on the other side, ideally richer than before, is just as important. Unless you’re one of...
Home of Science
Follow me