Equities are finally showing signs of a confirmed trough, according to an analyst who called for a 25% rise

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concluding their best weekly gain since 1974, investors could give more credit to the belief that the worst of the stock market crash is over. & nbsp; “Data-reactid =” 16 “> With the S&P 500, the rise of more than 10% for the week ending April 9 to end its best weekly gain since 1974, investors could give more credit to the belief that the worst of the stock market crash has passed.

If history is any indication, according to Tom Lee, managing partner of Fundstrat Global Advisors, stocks could prepare for an even fiercer recovery.

At the heart of Lee’s thesis is the historical performance of the markets during previous declines of 30%. Looking back at the last 10 such events dating back two centuries, Lee points out striking symmetries between the time it takes to recover losses and the speed with which stocks have moved up and down.

Using the average ratio of periods of collapse to recovery in previous bear markets, Lee hypothesized on March 24, just after losses totaled 33% at short-term lows, than the S&P 500 could recover 50% of these losses in just three weeks. On Thursday, the S&P 500 briefly achieved this goal.

YFi PM from Yahoo Finance. “This same model says that we should reach unprecedented heights in three times the time it took to fall, which means that if we fell for six weeks, in July, August and September, we could be back in all the time. “” & Nbsp; “Data-reactid =” 20 “>” The speed at which you fall tells you how quickly you have recovered half of your losses and in fact how long it takes to recover all of your losses, “said Lee about his model on Yahoo Finance. YFi PM. “This same model says that we should reach unprecedented heights in three times the time it took to fall, which means that if we fell for six weeks, in July, August and September, we could be back to absolute records. “

like hedge fund manager Dan Niles, have warned investors that the recent rally was nothing more than a usual bear market trap. Emerging markets guru Mark Mobius echoed these concerns by warning of an impending double bottom. But defying these calls, Lee drew the 50% retrace line in the sand like the brand that historically confirmed a “clear” signal to investors. During this rout, this level in the S & amp; P 500 is 2,793. “Data-reactid =” 41 “> Other investors concerned about record unemployment rates, such as hedge fund manager Dan Niles, have warned investors that the recent rally was nothing more than a usual bear market trap. Emerging markets guru Mark Mobius echoed these concerns by warning of an impending double bottom. clear “for investors. During this rout, the level of the S&P 500 is 2,793.

“The fact that he recovered 2,793 is a big problem,” he said. “If you look back to 1987, 2002 or even 2008 or 2009, when the stock market recovered half of its losses, it was already deeply engaged in a recovery in the bull market. I think the decision made today is quite decisive. “

Looking at the average historical ratio of the time from peak to trough until recovery, Tom Lee of Fundstrat points out that the last 10 drawdowns indicate that the total recovery time is 2.5 times longer than the collapse . This would indicate a 100% recovery from March lows in three to four months.

Combining the counterintuitiveness of a market that would rebound faster if the news was so bad that it sent the market to the bear market faster than ever in history, Lee pointed out that the stock market tended to go down before that the fundamentals don’t increase.

“I know it sounds crazy, and I know everyone is rolling their eyes, but we have already recovered half of the losses in what the story should have happened: half in three weeks,” he said. he declares. “Look back at each trough, 1987, 2009, 2002, 1974, the lowest of the stock markets before the peak in jobless claims. Stock markets are at their lowest before consumer sentiment wanes … I just think it tells us that we’ve already expected the worst. “

After reaching the first part of his call for the S&P 500 to recover almost 50% of his losses almost perfectly, reaching the second part of Lee’s call would return the S&P 500’s record high of 3393 in the third quarter.

YFi PM& nbsp; as well as senior editor and on-air reporter covering entrepreneurship, cannabis, startups and the latest news from Yahoo Finance. Follow him on Twitter & nbsp;@zGuz.“Data-reactid =” 66 “>Zack Guzman is the host of YFi PM as well as senior editor and on-air reporter covering entrepreneurship, cannabis, startups and the latest news from Yahoo Finance. Follow him on Twitter @zGuz.

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