Huo Xing Finance reports: On June 5, Fundstrat strategist Tom Lee, in an interview with CNBC, stated that the current market may be in a cycle composed of three phases. As a well-known Wall Street bull analyst, Tom Lee has accurately timed several bull markets in recent years, but he believes this rally will not rise continuously. As of early June, the S&P 500 had gained nearly 11% for the year, despite challenges such as controversies surrounding artificial intelligence prospects and inflationary pressures from rising energy prices. Lee believes that corporate earnings exceeding expectations have been the core driver of market gains. Market expectations for first-quarter earnings per share (EPS) were around $70, but the actual result approached $80. If this trend continues, full-year EPS could rise by an additional $40, theoretically providing the S&P 500 with an upside potential of 800 to 1,000 points. He expects the current phase to still be the first stage of the rally, with the S&P 500—slightly above 7,560 in early June—having potential to rise further to around 7,700 in the short term. However, Lee anticipates that the second phase may arrive soon and last until around October, serving as a period of market consolidation. He notes that policy uncertainty from the new Federal Reserve chair, energy supply shocks, and IPOs and lock-up expirations from high-profile companies such as SpaceX, OpenAI, and Anthropic could increase equity supply and exert downward pressure on stock prices, potentially triggering a bear-market-style correction. Nevertheless, he believes this phase will gradually subside after the U.S. midterm elections, after which the market is likely to resume its upward trajectory, with 2027 potentially becoming one of the best years ever experienced by this generation of investors. (Jin Shi)
Fundstrat analyst predicts a market digestion phase ahead of the U.S. midterm elections.
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Summary
Fundstrat analyst Tom Lee says a market digestion phase could begin soon and last until October, amid uncertainties surrounding the new Fed chair and tech IPOs. He warns of bearish corrections during the second phase of the three-stage cycle, despite the S&P 500 rising 11% this year. Traders are advised to monitor key altcoins during this period. The Fear & Greed Index may also provide insights as the market absorbs risks ahead of the U.S. midterms. A bullish rebound is expected by 2027.
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