There’s a roughly 90% chance that the stock market has already bottomed in 2022, according to Fundstrat’s Tom Lee.
Lee thinks as long as the economy avoids a recession, the S&P 500 could surge to 5,100 in 2022.
“This recovery in equities to close above [the] 200-day moving average generates quite a lot of positive signal,” Lee said.
There’s a roughly 90% chance that the stock market found its 2022 bottom on February 24 when Vladimir Putin launched Russia’s attack against Ukraine.
That’s according to a Friday note from Fundstrat’s Tom Lee, who argues that as long as the US economy is able to avoid a recession this year, the S&P 500 could surge to 5,100 by the end of the year. That represents potential upside of 13% from current levels or a gain of 24% for any investor who bought at the low of 4,114 on February 24.
“We think lows for 2022 are in with >88% probability, [but] we still see stocks in a ‘jagged’ recovery in 1H2022. Full risk-on coming in 2H2022, [where the] S&P 500 can exceed 5,100 before year-end,” Lee said.
Driving his bullish view is the resilience of the US stock market despite all of the ongoing macro headwinds. Those include rising inflation, ongoing supply chain issues, geopolitical tensions, rising interest rates, and an inverted yield curve.
Despite the negative headlines, the S&P 500 is only down about 5% year-to-date after falling as much as 12% earlier this month, and its recent rally off the lows decisively broke through the 200-day moving average. That’s a bullish signal for the stock market, according to Lee, who pointed to historical market data showing strong forward returns during similar past events.