Veteran Wall Street investor Tom Lee says that the stock market still has legs, and that the anticipation of a correction is already a “consensus view.”
In a new interview with CNBC, Lee points out how a survey from the American Association of Individual Investors (AAII) shows that investors are still generally pessimistic despite the big rallies in US equities.
According to Lee, the negative sentiment suggests that markets are primed to go higher.
“A pullback is going to be inevitable, but from a timing perspective, sentiment still remains staunchly negative. So I think the gold standard is the AAII net bulls less bears. That’s been six consecutive weeks where it’s negative. That’s never really marked a market top, that has to flip positive and sustain for several weeks. I think if we’re going to say between now and year-end, could the market pull back? I’d say it’s possible, but to me, it’s probably from higher levels.
I think there was a lot of skepticism about even [the latest] FOMC (Federal Open Market Committee). I had a lot of clients tell us they thought the stock market would sell off because 25 (basis points) was priced in, but because almost everyone told me that, that was the consensus view. I think people were cautious into [last week], and that’s why we’re seeing the groups that should rally, rally big, like the small caps, and the cryptos, the financials and even the [Magnificent] Seven.”
As of Friday’s close, the S&P 500 is trading at 6,664.
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