Strategist: Market to 'melt up' into year end

Traders on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters

Even after a 9 percent surge by the S&P 500 in October, a prominent Wall Street strategist told clients he believes the rally will continue strongly into year's end.

Fundstrat's Tom Lee talked to investors and found many still have cash balances and are hesitant to add more equity exposure, a contrarian factor that should propel the market higher as these investors come back into the market.

"Among the concerns is the pending Fed rate increase; investors expect the U.S. dollar to rally, undermining equities and furthering headwinds to S&P 500 earnings and amplified stress for emerging market borrowers (U.S. dollar denominated debt)," Lee wrote in a note to clients Friday.

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However, Lee thinks this negative thesis is incorrect. Here is why he believes the market will "melt up" in the months ahead...

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