Fundstrat’s Tom Lee just issued a short term warning to traders following Friday’s major market pullback.
In a new interview with CNBC, Lee says that if past is prologue, the market sell-off may continue on Monday.
But in his view, that would trigger a buying opportunity.
“As you know, markets rarely bottom on Fridays anyway. So, maybe Monday is the flush. But then, that’s the buying opportunity.”
Lee says he views the decline as a healthy correction in an ongoing bull market.
“[The drop] may be overdue to an extent. We’ve had a nice rise of 36% since the April lows, and I believe today’s decline is the biggest in more than six months.
But it’s good to see the VIX spike. You know, the VIX spiked at 1.29% today. That’s the 51st largest ever spike in the VIX. So, we’re a top 1% move in sort of what I’d say is the market seeking safety.”
Absent further trade war escalation with China, Lee expects “buy the dip” buyers to return, with key drivers remaining intact.
“If I said, what are the reasons stocks have been attractive for the past 12 months? It’s been about the innovation coming from AI and it’s the innovation as Wall Street looks onto the blockchain and now it’s the Fed that’s beginning an easing cycle.
These three things have structural tailwinds that aren’t disrupted because of potential even rare earth dispute with China.”
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