The head of research of market intelligence firm Fundstrat says that the odds of a V-shaped recovery for the stock market in April are overwhelmingly high.
In a new interview with CNBC Television, Tom Lee says that based on historical patterns, the stock market could mount a recovery in early April.
“The spike in the VIX (volatility index) or the collapse in investor sentiment or consumer confidence, that all happened around February 2018, so really that coincided with the first low that was made in 2018, and the market began to stage its recovery…
But as we start to think about the second half of this year, first of all, we’ve already had the collapse in sentiment. We’ve seen $850 billion of cash raised over the past year in money market balances, and then in the second half, we were looking for tax reform, which really propelled stocks in 2017.”
According to Lee, much of the panic in the stock market has already taken place this year, leading him to believe that stocks should start regaining their bullish momentum this week.
“So I think that the odds of a V-shaped recovery in stocks that come after April 2nd is just extremely high, because we’ve already sequenced a lot of the panic that people saw in 2018. I think it’s already taking place.”
A V-shaped rally is a technical pattern indicating an abrupt bullish reversal and a sharp surge in the market.
Earlier this month, both the stock and crypto markets took a hard hit after President Donald Trump announced tariffs and refused to rule out an upcoming economic recession.
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