Fundstrat CIO Tom Lee believes that the S&P 500 is on the brink of igniting a big surge to a fresh record high.
In a new CNBC interview, Lee says the market has carved a major low at 6,316 late last month and is now poised to spark a new uptrend.
“I think the bottom’s in because last week was a period where the war was getting worse, and oil was going up, but stocks weren’t going down. So that’s a good precondition. And today, we have the rate of change that the war is de-escalating. So I think stocks are now in the process to go back to their all-time highs, and I think maybe get to that 7,300 that we were expecting this year.”
Lee says the strongest asset class is crypto, while expecting three sectors to outperform the broader market.
“I think the leadership has been revealed in the last six weeks, because since the war started, the number one performing asset class has been crypto, Ethereum, and then energy stocks, Mag7, software and financials. So to me, that’s the group that’s leading us up.”
While Lee says that energy stocks went up for obvious reasons, he now believes it will decline to the benefit of the Magnificent 7 stocks and software.
“The negative correlation to oil was the highest in almost a decade for the Mag 7, Ethereum and software. So I think that as oil flattens or cools or the curve flattens, those names are going to get a bid and they’ve gotten already cheap. We know the Mag 7 is trading almost at a market multiple.”
As of Wednesday’s close, the S&P 500 is trading at 6,782.
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