Fundstrat
Fundstrat's Tom Lee: Buying Opportunity Ahead?
10/10/2025, 8:17:54 PM
Economic Summary
- The market has risen roughly 36% since the April lows, and today's decline is the largest in over six months, suggesting a healthy pullback after a strong run.
- The VIX spiked about 1.29%, the 51st largest ever spike, indicating investors are buying protection; such spikes often mark interim lows and are followed by positive one-week and one-month forward returns.
- Three structural tailwinds—AI-driven innovation, increased Wall Street interest in blockchain, and the Federal Reserve beginning an easing cycle—have supported equities over the past 12 months and remain intact absent a major disruption.
- Geopolitical risks, notably a potential escalation with China (for example over rare earths), could interrupt these tailwinds and turn a routine pullback into a more significant sell-off.
Bullish
- This pullback represents a buying opportunity
- Forward returns are historically strong one week and one month after VIX spikes
- Structural tailwinds from AI, blockchain adoption, and Fed easing support equities
- Buy-the-dip buyers typically drive rebounds after single-day selloffs
Bearish
- Potential escalation with China (e.g., rare-earth dispute) could derail the rally
- Today's decline was the biggest in more than six months
- Investors are seeking protection as evidenced by a VIX spike
- Market may close on its lows ahead of a long weekend, risking further flushes
People mentioned
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