Stocks had a rough start to the year.
In the first four trading days, the S&P 500 fell more than 2%, and it wasn’t until trading on Thursday that the benchmark index rallied to erase its year-to-date losses.
Fundstrat’s Tom Lee says, however, that because we’re in a bull market, this is probably the perfect start to the year.
Lee’s forecast for the S&P to climb to 2,325 this year is one of the most bullish on Wall Street.
In a note to clients, Lee writes there were 40 other times the market was in negative territory after four days.
In bear market years, stocks finished the year higher 45% of the time. But when stocks were not in a bear market and the economy was not in recession, stocks finished higher 92% of the time.
Lee writes: “[W]e are not in a recession and we have not entered a bear market. Again, this highlights the importance of understanding market regime. The US is in a bull market and hence, dips need to be bought.”
Lee also included this chart of how stocks performed in every bull market without a recession.
It was only in 1962 that the S&P 500 finished the year negative after weakness in the first four days. “It was the ‘Kennedy slide’ and to this day, the reasons for the decline are unclear,” Lee says.