'Investors were underweight risk': Strategist

Stocks hitting all-time highs following the Fed's decision to continue its stimulus program unabated show that there was plenty of money sitting on the sidelines, JPMorgan Chief US Equity Strategist Tom Lee said Wednesday.

"I think there were a couple of positive takeaways from today's action," he said on CNBC's "Fast Money."

(Read more: Dow, S&P 500 post all-time highs as Fed maintains stimulus)

The first was that the move in the bond market spurred a change in expectations of how bonds should be valued, Lee said.

The second was that cyclical stocks rallied.

The third was that investors appeared to have been underweight equities. "I'd say that at the end of the day, it's just telling me that investors were underweight risk going into this, and now I think we're forcing people to make decisions as well."

Lee, who held a 1,775 target for the S&P 500, said that the day's moves were positive for the market.

Options Action: Tracking FedEx

"I actually think it still sets us up pretty constructively into year end, but of course now that we're 20 points higher, it does take away that many points from the upside," he added.

His top sector picks were technology, financials and health care.

(Read more: Now, it's clear sailing for stocks: David Bianco)

Lee also assessed the effect of the Fed's decision to continue its $85 billion-per-month asset-purchase program on bond yields.

"If we had better growth and better employment, I think we'd all be a lot more comfortable with 3 percent," he said.

But with mixed economic data, the Fed's ongoing purchases would support confidence.

"I do think investors feel a lot more comfortable knowing that there's an accommodative Fed behind that," Lee said.

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

Trader disclosure: On Sept. 18, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Dan Nathan is long NFLX; Dan Nathan is long IBM; Dan Nathan is long TSLA; Dan Nathan is long CAT; Dan Nathan is long MSFT; Dan Nathan is long FXI; Dan Nathan is long WFM; Dan Nathan is long ZNGA; Dan Nathan is long XCO; Dan Nathan is long SPY; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long NOK; Brian Kelly is long oil; Brian Kelly is long natural gas; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long AGU; Guy Adami is long NUE; Guy Adami is long BTU; Guy Adami's wife, Linda Snow, works at Merck.