In a note to clients, Lee pointed to three factors that suggest the market has capitulated and is setting up for a year-end rally.
Those factors include two 90% down volume days, the price action in Wall Street’s fear gauge, and a disbelief in Powell’s potential policy pivot.
“Two 90% down days are a sign of a bottom, not a top,” Lee said, referring to down trading volume in New York Stock Exchange listings hitting extreme levels.
Each 2% market sell-off on Friday and Tuesday was so widespread and touched so many stocks that 90% of the volume on those days were associated with selling rather than buying.
But over the past two years, instances of two 90% down trading days occurring within a period of five trading days has represented a buyable dip of a sell-off that was set to reverse, according to Lee.