Tom Lee, a long-standing market bull, predicts a profitable period of time for investors in September.
Lee says that the S&P 500 will rise more than 100 points in this month's trading. He warns that the positive momentum is temporary.
The Fundstrat Global Advisors co-founder and head for research, said that there could be a strong rally in September. He spoke to CNBC's Trading Nation on Friday. "We don't believe there is a window for a 10% correction in most of 2021. October is the window in which we believe you can have a potential 10% pullback.
Lee attributes the vulnerability of the country's fiscal and monetary policy to the growing risks and uncertainty around the flu and pandemic.
CNBC contributor stated that tapering is closer when we get that close to tapering. "That's when the debt ceiling rhetoric returns, and if there will be concerns about the ceiling, the bond markets could panic."
Stocks are often affected by turmoil in the bond markets. Lee indicated that he would buy the stock.
The Federal Reserve should remain dovish longer because of uncertainty about Covid-19 Delta cases and their economic impact. Lee believes it is a recipe to new market highs.
"The U.S. remains in an underlying expansion. Lee, who managed equity strategy at JPMorgan Chase between 2007 and 2014, said that this is a risk on the formula.
He points out a rebound in crude oil prices and the rise of bitcoin to over $50,000 as proof.
Lee's top picks for markets still include trades that are most closely tied to economic recovery. He is particularly fond of energy and materials. Opportunities are also seen in FAANG stocks (also known as Alphabet, Amazon, Apple and Netflix).
Lee stated, "My guess is that quite some investors believed we'd have an August correction of 10%." "So, money was removed from the table. People re-risk by buying epicenter and cyclical ideas.
Lee is optimistic that the S&P 500 will surpass 4,650 in September, 50 points higher than his year-end goal. The index closed Friday at 4,535.43, which is less than a quarter of its record high.
Disclosure: Tom Lee is the owner of bitcoin.