Hedge fund veteran Tom Lee remains bullish on the stock market despite the corrective measures to start the month of August.
In a new interview with CNBC, the managing partner of Fundstrat Global Advisors says his firm believes stocks are likely to bottom for the month.
Lee says a few macro factors are beginning to look favorable for the stock market.
“I think some constructive things happened (on Friday) that lead me and Mark Newton, our head of technical strategy, to think we may be at a low point for the month of August.
The dollar reversed quite sharply and interest rates fell. As you know, both would be pretty big headwinds for stocks.
When we came in August, it’s been four pretty rough days so far. But I think the number of jobs was decent. I’m kind of optimistic that we get a good CPI (consumer price index) report (this) week, so that’s a road map to see stocks do better (this) week.
The CPI is usually used as a proxy to track inflation rates. Traders are keeping a close eye on the statistic as it could potentially signal whether the Fed will continue to raise interest rates.
Lee also notes that institutional investors are quickly turning bearish in the stock market after the recent correction. According to Fundstrat’s director, the development suggests that the stock market is not yet euphoric, as trillions of dollars are still waiting on the sidelines.
“It still amazes me how many of our institutional investor clients are bearish. Over the past four days, many of them have jumped to bet against rising stocks. There are technical reasons to be a little bit bearish in August, but I think people are going bearish very quickly here. That is not a sign of a booming market. It’s a sign that people are being brought in, and $5.5 trillion in cash is still waiting to come in.”
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