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Here comes a 'face ripper' stock market rally: strategist

Brian Sozzi
·2 min read
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Buckle up newbie traders, the market is about to rip your face off, says veteran strategist Tom Lee at Fundstrat.

Lee — a long-time bull — outlined several reasons for a potential strong (aka so strong it would rip your face off, as the lingo goes on Wall Street) market rally over the next few sessions. 

First is strength on the last trading day of the month — or March 31 — as fund managers do their latest round of portfolio window dressing. To window dress portfolios at the end of a quarter or month, managers often buy winning stocks and dump losers to visually improve their performance. 

That may be playing out a bit in Wednesday's session as all three major averages were in the green by midday.

Meanwhile, Lee also points to the tendency of stocks to see solid inflows on the first trading of a month. Seeing as investors have been hesitant to buy stocks this week amid the blowup of whale trader Bill Hwang's family office Archegos, they could come back in force starting in April as the markets have since stabilized.

"Investors have become short in the past few days. But we are literally facing a turning point. And add to the performance anxiety created by the past few weeks, and it is a set-up for a big chase higher," Lee points out. 

The stock market likes April.
The stock market likes April.

Further in play for the bulls are favorable seasonal factors for the bulls, as BofA strategist Stephen Suttmeier wrote in a new note this week. 

"Within the context of all 12 months of the year, April is the second best month behind July in terms of average return and the second best month behind December in terms of the percentage of time up," Suttmeier says. 

The average return in April for the S&P 500 is 0.91% dating back to 1928, Suttmeier's data shows. 

Suttmeier adds that the first 10 sessions of April has seen an average return of 0.88% on the S&P 500, again going back to 1928. That makes April the second best performer in its first 10 sessions behind July, which has has 1.53% increase. 

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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