Fundstrat's Tom Lee says the "face-ripping" rally he predicted may still arrive, just delayed, after a Federal Reserve meeting he called hawkish. He points to an incrementally dovish data point ahead and a technical pattern that preceded August's rebound, as S&P 500 futures rose after a run of losses.
Lee calls the Fed decision "peak hawkish"
Tom Lee, head of research at Fundstrat, said the Federal Open Market Committee's statement and Kevin Warsh's press conference amounted to "peak hawkish Fed". In a video mixing references to "Game of Thrones" and "The Simpsons," he said the rally he previously predicted may still arrive, just delayed.
He added that other Fed speakers may walk back some of Warsh's hawkish tone in the days ahead. Lee also pointed to an incrementally dovish data point: a new methodology for the core personal consumption expenditures price index, due at the end of the month, that could cut the year-on-year reading by 0.4 percentage points.
Futures rise after a run of losses
Lee also cited the technical picture, noting a "waterfall"-like decline paired with rising relative strength index readings — a pattern that preceded a rally in August. S&P 500 futures gained 0.77% on Thursday, following three consecutive losses for the S&P 500 and seven declines in eight sessions. The cash index was last down 0.45%.
Source: MarketWatch
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