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JPMorgan’s Chief US Equity Strategist Tom Lee is known on Wall Street for his typically bullish outlook on the stock market.Lately, however, his views on where the S&P 500 is headed from here haven’t been as sanguine as usual.
In his outlook for 2013, published in early December, Lee wrote, “We see risks building in 1H and, thus, expect the S&P 500 to be range-bound in 1H13 with a mid-year target of less than 1400,” before predicting that the index would eventually appreciate to 1580 by the end of the year.
Today, S&P 500 futures are trading around 1457. In other words, Lee forecasts stocks will go down before they go up.
Now, in his latest note, Lee tells clients not to get sucked into the growing consensus view that stocks are going higher (emphasis added):
Our baseline for 2013 remains that of a tricky 1H, with strength to start (and as we mentioned in earlier notes, we see a move toward 1500) but followed by a correction that sees 1350 before midyear. This is a contrarian view on timing—we are seeing a growing chorus of investors who see stocks strong throughout 2013. In fact, even notable bears have turned “bullish” on equities in 2013. We do not view this as a sign of “ringing the top”; rather, it is a reminder that investors need to be mindful of consensus and risks to the consensus view.
Lee writes that although the global economy appears to be on the mend. However, as a final caution, he warns: “Bottom line: Stay constructive but wary as we approach 1500 or so.”