It's time to buy the dip in stocks after Tuesday's rout as data shows inflation is falling and the market already bottomed, Fundstrat says

According to Fundstrat, inflation is falling and the market bottomed out in June.

After the August Consumer Price Index report showed inflation slightly above expectations, stocks fell the most in two years.

Tom Lee said in a note on Friday that stocks don't have to break below the June lows.

Lee pointed out that inflation was still coming down, even though it did cement expectations for another aggressive rate hike by the Federal Reserve. Over the past two weeks, 14 reports of economic data have come in, and 12 of them show signs of falling inflation.

After a peak in inflation, the S&P 500 bottomed out.

In June of this year, the percentage of S&P 500 stocks that have fallen more than 20% from their week high was at 73%, with anything above 70% typically representing a market bottom.

The recent sell-off could have taken the S&P 500 above that threshold again, which would be a good sign for investors.

The June 2022 equity lows should bedurable even for those in the 'inflationista' camp or even the 'we are in a long-term bear' camp. Despite the index tanking in the first half of the year, he still predicted the S&P 500 would rally to all-time highs. It would be an increase from current levels.