• A inventory market correction seems imminent after the S&P 500 rallied 21% over a interval of 14 weeks, in accordance with Fundstrat’s Tom Lee.

• Lee nonetheless maintains a bullish view on shares for 2024, however mentioned historical past suggests the market is about to succeed in a short-term peak. 

• “I believe we [the S&P 500] could be approaching one thing shut to five,000, possibly somewhat increased, after which I believe a drawdown follows,” Lee mentioned.

A inventory market correction seems imminent, in accordance with one of the vital bullish fairness strategists on Wall Avenue.

Fundstrat’s Tom Lee instructed purchasers on Tuesday that after the S&P 500 surged 21% over a 14-week interval, a downturn is probably going inside the subsequent few weeks.

“I believe we [the S&P 500] could be approaching one thing shut to five,000, possibly somewhat increased, after which I believe a drawdown follows,” Lee mentioned.

Lee checked out market historical past and located seven situations since 1927 when the S&P 500 rose 13 out of 14 weeks, because it simply did. In 4 of these seven situations, the inventory market peaked inside the subsequent two weeks.

Lee mentioned an imminent market correction additionally is smart as a result of it will mimic a inventory market buying and selling sample that final occurred throughout the bear market low in October 2022.

The inventory market jumped 20% for 16 weeks beginning in October 2022 earlier than it staged a 9% correction, after which it rallied 21% over a interval of 19 weeks earlier than it offered off by 11%. On condition that the S&P 500 has lately risen by 21%, a drawdown wouldn’t be out of the odd, in accordance with Lee.

Lee mentioned he expects a 7% decline to materialize, which might ship the S&P 500 to about 4,600 based mostly on present ranges.

As to what elementary subject would drive such a decline, Lee mentioned the timing of the Federal Reserve’s interest rate cuts might spark concern amongst buyers, particularly if the central financial institution waits too lengthy and the financial system begins to weaken.

Regardless of the short-term bearish outlook, Lee reiterated his bullish view on the stock market in 2024, saying that the S&P 500 might in the end rise to a spread of between 5,200 and 5,400.

“Finally this can be a good 12 months, we’re in a bull market,” Lee mentioned.

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