That recent selloff in the small caps? It was actually an "extremely bullish signal" that could help propel the S&P 500 index past the 2,100 level by year-end, Wall Street strategist Thomas Lee told CNBC on Monday.
The setup for the final three months of the year is "quite constructive" following the pounding small-cap stocks had endured in the last few months, Lee, co-founder of Fundstrat Global Advisors, said on "Squawk on the Street."
"The nine times the Russell has underperformed the S&P since its inception, which is '79, only two of them were associated with bear markets. Most of this time, small caps underperform because of either a rotation [or] risk abatement," he said. "In this case, we've had a lot of movements across markets that have rattled people and I think that explains why small caps have underperformed. But it's usually an extremely bullish signal. This is an end of a selloff."