Lee recommends taking profits off the table and injecting them into other market segments.
The stock market may be on track to print a historic high this September, a position held so strongly by the market bull and Bitcoin investor, Tom Lee. According to Lee, investors are on track to make good gains this month, however, the bullish run is not meant to last forever, as notable corrections are lined up in the months ahead.
Against the current performance outlook of the S&P 500 Index (INDEXSP: .INX) which is currently pegged at 4,535.43, following a 0.25% drop from its All-Time High (ATH), Lee posits that the broad market index will move by at least 100 points in September. This growth he said is poised to be followed by a 10 percent drop in October.
“We could have a really strong rally in September,” the Fundstrat Global Advisors’ co-founder and head of research told CNBC’s “Trading Nation” on Friday. “We didn’t think there was a window for a 10% correction for most of 2021. The window where we think you could start to have potentially a 10% pullback in October.”
There are inherent vulnerabilities in the broad financial market as highlighted by Lee, as fueled by the rising COVID-19 Delta variant. The uncertainties also involve the vulnerabilities linked to the growing fiscal and monetary policy risks. These events may push the Federal Reserve to continue its programs including cushioning the markets with funds to combat the economic impact of the pandemic.
Lee has highlighted these interventions to be vital in pushing the market to a new high. However, there are details emanating about the possibility of the Feds tapering its interventions in the near term. This move also notably comes with its own challenge.
“We get that much closer to tapering,” the CNBC contributor said. “That’s really when the debt ceiling rhetoric comes back, and if there are going to be concerns about the debt ceiling, the bond market could panic.”
Irrespective of the turns the market takes in the near term, Lee says he will be stacking up.
Hopes for Market Investor
Sustainability is the hallmark of staying profitable as a stock market investor or trader. Against the rise and fall that is up ahead, Lee is recommending taking profits off the table and injecting them into other market segments.
“My guess is that quite a number of investors thought we’d have a 10% correction in August,” Lee said. “So, money was taken off the table. Usually when people re-risk they start buying cyclical and epicenter ideas.”
Lee has identified some of the promising shares to be FAANG stocks including Facebook Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN), Netflix Inc (NASDAQ: NFLX), and Alphabet Inc (NASDAQ: GOOGL). Additionally, Lee is also bullish on energy and materials, while the growth trends of the cryptocurrency ecosystem have also made Bitcoin (BTC) a viable option for investors.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
