One of Wall Street’s most optimistic strategists says a stock market correction is imminent

Fundstrat’s Tom Lee says investors should brace for a correction.Cindy Ord/Getty Images

  • According to Fundstrat’s Tom Lee, a stock market correction appears to be imminent after the S&P 500 rose 21% over 14 weeks.

  • Lee still has a bullish view on stocks for 2024, but history suggests the market is about to reach a short-term peak.

  • “I think we [the S&P 500] could approach something close to 5,000, maybe a little higher, and then I think there will be a decline,” Lee said.


According to one of the most optimistic stock strategists on Wall Street, a stock market correction appears to be imminent.

Fundstrat’s Tom Lee told clients Tuesday that after the S&P500 up 21% in a 14-week period, a downturn is likely in the next few weeks.

“I think we [the S&P 500] could approach something close to 5,000, maybe a little higher, and then I think there will be a decline,” Lee said.

Lee looked at market history and found seven examples since 1927, when the S&P 500 rose thirteen out of fourteen weeks, as it just did. In four of these seven cases, the stock market peaked within the following two weeks.

Lee said one upcoming market correction also makes sense because it would mimic a stock market trading pattern that last occurred during the bear market low in October 2022.

The stock market rose 20% for 16 weeks starting in October 2022 before a 9% correction, then rose 21% for a 19-week period before selling off 11%. Considering the S&P 500 recently rose 21%, Lee said a decline wouldn’t be unusual.

Fundstrat

Lee said he expects there to be a 7% decline, which would send the S&P 500 to around 4,600 points based on current levels.

If…

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