‘Quietly, we urge investors to back up the truck, please.’ Thomas Lee Lee, head of Fundstrat Global Advisors, doesn’t feel he can overstate that point, noting in a research report dated Friday that investors “ignore at your peril” bullish signs crystallizing in markets despite jitters about international trade conflicts between China and the U.S. that rocked the Dow Jones Industrial Average DJIA, -0.34%, the S&P 500 index SPX, -0.66% and the Nasdaq Composite Index COMP, -1.00% on Monday.
Because the plot of futures contracts normally slope upward, an inverted curve reflects panic and market capitulation and are often viewed as contrarian indicators, says Lee, estimating that the market tends to rise 8.9% in the following six months after an inversion. “The current macro environment is far from perfect, but macro fundamentals likely justify higher equity prices,” the analysts wrote.
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