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Fundstrat’s Tom Lee said the S&P 500 could significantly exceed his 2024 end-of-year price target of $5,200.
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Lee said the stock market’s strong performance in January bodes well for further gains throughout the rest of the year.
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“If January’s barometers are correct, the upside for the S&P 500 could be more than $5,500,” Fundstrat said.
Positive stock market returns in January suggest to Fundstrat’s Tom Lee that his year-end S&P 500 price target of 5,200 may be too low.
Mr. Lee has been one of Wall Street’s most bullish strategists over the past year, successfully driving the 2023 bull market rally when most other strategists were worried about a possible recession.
According to Lee, the stock market got off to a tough start this year, with negative returns in the first five trading days of January after a strong rally in Santa Claus. When these trading indicators flash negative, it usually bodes poorly for the stock for the rest of the year.
But Lee said the S&P 500 index was on track to rise more than 2% in January, with the so-called January barometer overturning both negative trading indicators.
“The full year tends to happen in the first half of the year, so you can tell a lot about the year by what happens in January,” Lee said.
Lee crunched the numbers and found that since 1950, there have been 13 times since 1950 when the S&P 500 index returned more than 15% in the previous year and had a positive return in January, like this month. The full-year returns after that were incredibly strong, with a median profit of 16% for him and a win rate of 92% for him.
“I think this confirms that we are on track to achieve double-digit profits in 2024, which is a very good sign,” Lee said.
The only worst year for stocks in this scenario was in 2018, when the Federal Reserve tightened financial conditions too much and stocks fell 20% in a few weeks. This time, Lee said the Fed is now in easing mode and a rate cut is on the horizon.
If Mr. Lee is correct, the rise he predicts would send the S&P 500 skyrocketing to around 5,500, well above Mr. Lee’s already bullish call for the index to reach 5,200 by the end of 2024. There is.
“If you don’t think the Fed is making a policy mistake, this is going to be a great year for stocks,” Lee said. “Maybe we’re thinking stocks are at 5,200, so maybe we’re too low right now. may be 5,400 to 5,500.”
Read the original article on Business Insider
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