Top strategist Lee: New market highs by summer

Published Tue, Apr 5 20163:14 PM EDT

While many investors remain skeptical about the recent market bounce, one prominent strategist believes the worst is behind us and the rally will continue. What can investors buy to take advantage? "The period from August 2015 to February 2016 was a 'bear market' even though the S & P 500 did not statistically fall 20 percent," Fundstrat's Thomas Lee wrote in a note to clients Tuesday. "We realize many investors look to the remainder of 2016 with apprehension, however, we believe equity markets are poised to make new highs in coming months." Since 1998, Lee has been a perennial top-ranked equity strategist and analyst on Wall Street by Institutional Investor . The strategist stated investors are still "net short" stocks setting up a short squeeze opportunity for the bulls. Short interest is 4.3 percent of the market's float, which is higher than the market low in March 2009, according to Lee. He cited how the market rose 50 percent from March 2009 to September 2009 as an example of what can happen when investors started covering their bearish bets. He believes U.S. companies will have a "sales and earnings recovery" this year as the dollar reverses from strength to weakness. In 2015, the double-digit rise in the dollar hurt S & P 500 sales by $93 billion and earning per share by $10. So with the U.S. dollar currency index down about 4 percent year to date, it should benefit multinational companies' financials. "Global economic momentum inflected in mid-February, evidenced by the upturn in many PMIs (purchasing managers indexes) and in the improvement of credit spreads, and in the rise in risky assets and the vast improvement in market internals," Lee added in the note. Here are the sectors and stocks Fundstrat recommends to best play the bull market resuming. CNBC Pro highlighted 10 Fundstrat recommended multinational stock ideas on Feb. 8 that benefit from a weakening U.S. dollar. The list included General Motors and Cisco Systems . Watch an in-depth interview with Thomas Lee about his investment philosophy here: Pro Talks: Tom Lee on how to beat market in 2016

Traders work on the floor of the New York Stock Exchange.

Brendan McDermid | Reuters

While many investors remain skeptical about the recent market bounce, one prominent strategist believes the worst is behind us and the rally will continue. What can investors buy to take advantage?

"The period from August 2015 to February 2016 was a 'bear market' even though the S&P 500 did not statistically fall 20 percent," Fundstrat's Thomas Lee wrote in a note to clients Tuesday. "We realize many investors look to the remainder of 2016 with apprehension, however, we believe equity markets are poised to make new highs in coming months."

Since 1998, Lee has been a perennial top-ranked equity strategist and analyst on Wall Street by Institutional Investor.