Fundstrat’s Tom Lee thinks March will be an “up month” for the stock market, despite the geopolitical instability unleashed by the US and Israel airstrikes on Iran.
In a new interview Joining CNBC, Lee predicts that the worst war-related sell-off will occur this week.
“No one likes to see headlines and images of explosions and war, and so we have jumps in risk premiums – that’s why the VIX jumps. But it won’t really change the fundamentals of the US, so in the past the markets have kind of sold off in the build-up, and then they tend to do better once the battle starts, and I think this will be similar.”
The VIX is the ticker for the CBOE Volatility Index, which uses options to measure the market’s expectation of 30-day volatility for the S&P 500. At the time of writing, it is up more than 5% on Monday.
Lee says stocks in the Magnificent 7 and the software and crypto sectors all showed “early weakness” and are in the final stages of bottoming or have already bottomed out.
“At least as far as software stocks in general are concerned, the whole complex has fallen back to the levels of last April. To me that is clearly an overreaction.
So I think it makes sense that you’ll see some of the groups that were hit hard come back, including the Mag 7.”
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