10% Correction Can Strike Stocks After a Profitable September, Says Tom Lee


Longtime stock market speculator Tom Lee predicts a profitable period for investors in September.

According to Lee, the S&P 500 is set to increase more than 100 points in September. However, he warns that the positive momentum may end after a profitable September.

The Fundstrat Global Advisors’ co-founder and head of research Tom Lee said on Friday, “We could have a really strong rally in September. We didn’t think there was a window for a 10% correction for most of 2021. The window where we think you could start to have potentially a 10% pullback is October.”

Lee attributes the vulnerability in the stocks to growing monetary and fiscal policy risks — and also to uncertainty surrounding the pandemic and flu season.

When there is an upheaval in the bond market, it generally spills to stocks. But Lee is giving signs that he would be a buyer.

Lee sees uncertainty regarding delta variant cases and its impact on economy pushing the central bank to stay dovish for longer. Lee states that it is a recipe for new highs in market.

Lee’s top market picks involve trades that are mostly tied to the economic recovery. He specifically likes materials, and energy. He anticipates opportunities in FAANG stocks, i.e., in Facebook, Amazon, Apple, Netflix and Alphabet.

Lee believes that the S&P 500 may exceed 4,650 in the September month — 50 points more than his year-end target.

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