JP MORGAN: We’re Still Bullish, But Stocks Might Go Nowhere For The Next 3 Months

Thomas Lee Strategist JPMorgan
Thomas Lee

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JP Morgan’s equity strategist Tom Lee is still bullish on the stock market.  His 2012 year-end target is 1,350.However, with the S&P 500 up 20% since October, history suggest that stocks could stall for months before rising again.  In a note to clients (via WSJ MarketBeat).

There have been 63 prior instances of a 20% gain in 4 months. Over the next 3 months, markets were flattish with average gain of 1.2% (4.8% annualized) and decline of 5% or more 17% of time…thus, a likely “pause.”

Fortunately for the bulls, the lull doesn’t last very long.  From Lee’s note:

The 6-mo/12-mo returns were considerably better with 6.3%/8.5% further gains and a win ratio of 68%/70%, respectively—thus, resumption of trend.

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