Stock market outlook: Another 'buy the dip' opportunity as economy expands

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The stock market is presenting investors with another 'buy the dip' opportunity as sidelined cash piles up and the economy continues to expand, Fundstrat says

"Since March 2023, the 'buy the dip' regime has been in place and is based upon measuring how resilient equities are in the face of a sell-off," Lee explained in a Friday note."Stocks have recovered losses pretty quickly. And we generally view this pull back as a consolidation and equities will soon recover."

His confidence stems from three key factors, including a reawakening IPO market following the successful debut of Cava, a growing pile of sidelined cash totaling more than $5 trillion, and"The IPO market is coming back to life. There have been several high profile IPOs this past week including Cava. IPOs are a way for institutional investors to gain risk-on exposure, as they allocate and participate in new issuance.

Lee expects upcoming data to bolster his view that the economy remains in expansion mode, with the June employment report showing continued strength while inflation reports could show a continued slowdown.

 

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