Tom Lee's *NEW* Prediction for Stocks

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Fundstrat의 Tom Lee는 6월 CPI 둔화와 9월 금리 인하 기대(약 94%)를 근거로 소형주(IWM/Russell 2000)가 추가 상승할 것이라고 주장한다. 러셀2000은 2021년 말 이후 최고 수준이며 소형주 EPS 성장률 전망은 2024년 4분기 89.1%, 2025년 1분기 46.9% 등으로 높다. 7월 하순은 계절적으로 약세 구간이므로 메가캡 기술주 조정이 올 수 있으나 그때는 저점 매수 기회로 본다. 2024년 IWM 50% 상승 전망을 재확인했다(현재 약 6% 상승). 다만 주요 기술기업 실적 발표(ASML, TSMC 등)가 기대에 못 미치면 위험이 있다고 언급했다.

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01. Tom Le and fun Strat are out with a few new notes today on why stocks will continue higher over the next couple of weeks specifically iwm the Russell 2000 ETF that continues to outperform even the equal weight SNP is hitting a new all-time high today and the Russell 2000 which continues higher as well hitting levels you have not seen since late 2021 the Russell 2000 is up almost 2% yet again today funp says broader Market could play catchup to technology as iwm breaks out the weekly chart of iwm shows the absolute breakout in iwm above 210 that arguably should kick off a rally in the weeks to come and this is the chart that fun strats Mark Newton provides and he's looking at a weekly Candlestick chart which is probably appropriate to do in this specific circumstance and judging on of this chart that would make sense why iwm and small caps could continue to Rally because again let's be honest we're heading into the First Fed rate cut that's priced into markets for September whether that's November September December doesn't matter because the economy is doing okay that's the argument and if we're heading into a rate cutting regime from the fed and the economy is doing well what's there not to like about small caps and you can see here here the expected EPS growth of small caps is around 18 1.5% for this quarter 62 12% for next quarter and then 89.1% for the fourth quarter of 2024 and it doesn't stop there because first quarter of 2025 You're Expecting 46.9% growth and then 53.2% growth in Q2 33.6% growth in Q3 27 .3% growth in Q4 and 2026 for q1 You're Expecting 28% growth and when you're looking at year-over-year numbers here comparing Q3 2024 which is expected to grow 62.5% to Q3 of 2025 expected to grow 33.6% that's still very strong year-over-year growth not necessarily starting from a low place like we are now but just starting from a place that's higher and going even higher hopefully that makes some sense I also think it's worth remembering that while the russle and the equal weight S&P did not participate basically at all for much of 2024 so far I think that means you could see these areas of the markets hold up better if we do go into a potential correction I think what a lot of Wall Street fund managers are going to fail to tell you over for the next couple of weeks is the back half of July is seasonally one of the worst periods for markets and given how much your mega cap Tech has rallied in just the last quarter anywhere from 25% on the low side like that's the low side and then 60% on the high side you're probably due for a reset of expectations and given the Super 6 or Max 7 whatever you want to terminology you want to use that controls about 40% of the markets so a disappointment there would not be great for the headline S&P but I don't think it needs to spell disaster for small Caps or for even the equal weight S&P and I think at this point you should be prepared for a correction and I would use it as a buy the dip opportunity as long as the economy continues to hold up in which it looks like it is and while history does not always repeat itself it usually does rhyme and this rhyme could be good for your portfolio Ryan Dietrich points out on X needs some good news the Russell 2000 small caps outperformed the Russell 1000 large caps by 3% on July 11th 2024 other times this has happened was 1987 low October 08 low October 2011 low the March 20th low January 21st November 23rd and last week all of these were super bullish times in fact the S&P 500 was higher a year later every time and up on average 32% fun Strat and Tom Lee say five reasons June CPI gave a green light for small caps to continue to Rally failed assassinations attempts against Trump is positive for Bitcoin and cyclicals the astonishingly low June CPI in rvw is giving the green light for small caps to continue to Rally Moody's says today the Federal Reserve could begin policy easing with a 25 basis point cut as early as in the upcoming 30th to 31th 31st July meeting Moody says today the Federal Reserve could begin policy easing with a 25 basis point cut as early as in the upcoming 30th to 31st July meeting although that does look likely it's still a possibility markets are only pricing in an 8.3% chance that we will get a July 31st cut and as to what I said earlier the second half of July tends to be a pretty rough period relative to the first half of July here in yellow where you tend to go pretty much straight up it usually Peaks around July 17th and then you do start to see a downtrend and that does perfectly coincide with Wednesday's earnings reports from asml that will be very important for your AI trade and again let's be honest you need to be impressed like knocks your knock your socks off impressed or there could be trouble in Paradise you're also going to get Johnson and Johnson Al Alan's health Ally synchrony US Bank Corp and many other banks that report pre-market Wednesday Wednesday and after hours you get United Alcoa discover Kinder Morgan crown castle Steel Dynamics and many more and then Thursday is going to be really your biggest day with tsmc pre-market and Netflix Thursday in After Hours the markets are now pricing a September rate cut as a 94% probability I think the bigger question becomes do we get a 25 or 50 basis point cut September and that really depends what happens with the economy Goldman Sachs also is coming out today and says the FED has solid rationale for a July rate cut and another potential risk to markets not trying to get political here but according to political former speaker Nancy I is convinced Biden will lose has been working the phones since June 27th in hopes of finding a way to ease him off the ticket if Biden were to abruptly step down in some fashion and see someone else step up that would create more uncertainty around the election and that would be seen as bad news for equities but that is only a hypothetical and we won't know anything until it happens Dan Ives one of the best tech analysts on Wall Street and he does work with wed Bush he says we believe Q2 earnings will be a major positive Catalyst for the tech sector and expect tech stocks to be up another 15% for the year adding to a robust Tech gains in the first half of 2024 as the AI Revolution spending wave takes center stage and propels big Tech higher during earning season although that's certainly possible expectations are higher than they've been in a very long time for the tech sector so could it go higher of course but you would need to see a knock your socks off kind of earnings reports fed gosby reports today that interest rate cuts are soon warranted you are starting to see some yield curve on inversions today and this has really been taking place over the last couple of days Kevin Gordon on X is reporting that the 30-year treasury yield is now above the 2-year treasury yield for the first time since January the one people pay the most attention to I would say is the 10 and 2year yield curve inversion that's been inverted for over two years now the longest inversion in history and you're still inverted 27 basis points even though at one point you were inverted over 1% it's actually the uninversity and that's usually happens because the FED is about to cut rates and that usually coincides with with a recession so that's the historical precedence if you hear people say oh the yield curve is uninverted that's because the fed's about to cut rates so that's getting priced into bonds and usually historically speaking when the FED Cuts rates recessions come shortly after so normally that un inversion pretty painful and then shortly thereafter within about 3 months historically you tend to enter recessions but that doesn't necessarily need to happen another yield curve inversion that a lot of people like to pay attention to is is the 3mon 10-year yield curve inversion and this sucker was inverted at the low almost 2% it's still inverted about 1.25% so not really anything to worry about here but this is more so triggered when the FED is about to rapidly cut interest rates by a large margin Seth golden right on X it's hard to make the case for a recession when crude oil is so well contained and fails to make lower lows the wedge pattern suggest Steady As She Goes economic conditions but as gunon bjeri reports on X implied correlation for the S&P 500 stocks are hovering around a record low Moody says today we expect the FED funds rate to be reduced by a cumulative 50 to 75 basis points in 2024 and another 100 to 125 basis points through 2025 and it's also being reported that Tom Lee reiterates his call for iwm gaining as much as 50% in 2024 so far we're just up 6% I think what's actually one of the most interesting things about today is while you have the Russell up over 1 and 1 12% the NASDAQ up a third of 1% S&P close behind the da that is up almost a half of 1% you also have the vix that is up 6% today that's a large move higher on a green day typically the vix moves higher I shouldn't say typically always the vix moves higher when there's more puts being bought on any given day for the S&P than calls so you are seeing a decisive flip from Call's being bought as a majority on the S&P today now to puts being bought on the S&P which is something we have not seen in a long time and again I have to imagine some of that is because of earnings that we are going to get throughout this week you also get retail sales data that comes out tomorrow you're expecting zero % but some economists think this could come in really negative and it will affect your GDP estimates you also get export prices and import prices which do have a large impact on GDP currently the Atlanta fed GDP now tracker is sitting at about 2% expected GDP but that could go up a lot or down a lot coming tomorrow and that definitely can affect markets judging off of this move higher in the vix today someone is nervous I will also mention for the Bulls if you look at this trend line it would suggest that there can be quite a bit of upside left here in our markets if earnings do go well just to get to this trend line from here would be another almost 42% up to almost 66% today and you do have about 2 and a 12% of all stocks breaking above their 50-day moving average so you have went from 35% 66% n just the last like week and a half that's a pretty strong sign for equities now as a contrarian perhaps you could say well now if you have participation does that mean we can finally get the downside because you're starting to get some capitulation some short covering and that's also kind of a valid argument the latest AI investor sentiment survey that we have shows bullish investors at 49.2% neutral investors at 29.1% and bearish investors at 21.7% and last but not least the fear and greed indicator today is at 61 which is now firmly in greed territory on Friday you were at 56 and this is rising because of the participation that you are starting to see in markets