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Fundstrat’s Tom Lee mentioned the S&P 500 may considerably exceed his 2024 year-end worth goal of 5,200.
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Lee mentioned a optimistic January for the inventory market bodes properly for additional positive factors all through the remainder of the 12 months.
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“If the January barometer is true, the upside to our S&P 500 goal is presumably as excessive as 5,500 or extra,” Fundstrat mentioned.
The inventory market’s optimistic return in January suggests to Fundstrat’s Tom Lee that his year-end S&P 500 worth goal of 5,200 could also be too low.
Lee has been one of the crucial bullish strategists on Wall Avenue over the previous 12 months, and he nailed the bull market rally in 2023 when most different strategists had been anxious a couple of potential recession.
In line with Lee, the inventory market bought off to a rocky begin this 12 months, with the primary 5 buying and selling days of January producing damaging returns after a robust Santa Claus rally. When these buying and selling indicators flash damaging, it is usually a nasty signal for shares for the remainder of the 12 months.
However with the S&P 500 on monitor to rise greater than 2% in January, the so-called January Barometer has overturned each damaging buying and selling indicators, in response to Lee.
“The total 12 months tends to play out within the first a part of the 12 months, that means what occurs in January tends to inform us rather a lot in regards to the 12 months,” Lee mentioned.
Lee crunched the numbers and located that since 1950, there have been 13 cases when the S&P 500 noticed a prior-year return of greater than 15% and a optimistic return in January, as has occurred this month. The total-year returns afterward had been extremely sturdy, with a median achieve of 16% and a win ratio of 92%.
“I feel that is confirming we’re on monitor for double digit positive factors in 2024, so an excellent signal,” Lee mentioned.
The one bitter 12 months for shares throughout this situation was in 2018, when the Federal Reserve tightened monetary circumstances an excessive amount of and despatched shares reeling 20% in a matter of weeks. This time round, Lee noticed that the Fed has now entered easing mode, with rate of interest cuts on the horizon.
If Lee is appropriate, then the positive factors he expects are coming would catapult the S&P 500 to round 5,500, which is properly forward of Lee’s already bullish name for the index to finish 2024 at 5,200.
“In case you do not assume the Fed is making a coverage error, it is an amazing 12 months for shares forward. Probably we’re too low, as a result of we predict it is 5,200. Now perhaps it is 5,400 to five,500,” Lee mentioned.
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