Stocks Complete First-Half Rally In Style

“The rivalry is with ourselves. I try to be better than is possible. I fight against myself, not against the other.” ~Luciano Pavarotti

Good evening:

With the first half of 2023 in the books, the U.S. stock market is up more than 16% YTD, ahead of schedule for Tom Lee’s prediction for the market to end the year 25% higher than it began. The Nasdaq 100 had its best start ever, topping 1998, up 39.74% YTD.

In January, Lee cited the “rule of first 5 days” as one reason why the market would rise in 2023. Now, he’s again turning to history.

Since 1950, there have been 22 instances when the S&P 500 is up by more than 10% at midyear, and 82% of the time, the market continued to climb in the year’s second half. This win ratio rises to 89% when the preceding year was a down year (as it was in 2022.) These historical cycles are meaningful and important because, as Lee is fond of saying, there is “nothing new under the sun.”

But it’s not just about historical trends. In recent weeks, Lee has repeatedly countered bearish fears of an imminent hard landing by asserting that “the economy is slipping into expansion.” Lending support to that view, the Commerce Department on Thursday significantly revised its Q1 GDP numbers and revealed that the U.S. eco...