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Tom Lee: When and why I expect new stock records

Longtime stock market bull Tom Lee said Thursday he expects the S&P 500 to make a new all-time high by the end of May on the back of improving fundamentals.

Making his case, the co-founder of boutique equity research firm Fundstrat Global Advisors told CNBC's "Squawk Box" he sees the upcoming earnings season notching a better-than-expected performance. "We're going to find that companies for the first time in really a few years may start to beat numbers and we raise estimates."

Many of the profit revisions in January were made when oil was lower and the dollar was higher, Lee said, arguing a recently higher crude price and lower U.S. currency should provide tailwinds for American corporations.

On "Squawk Box" late last month, two weeks after the Feb. 11 bottom in stocks, Lee said too many investors were tilted to the bearish camp.

That comeback took hold, with the S&P and the Dow Jones industrial average poised to close out the first three months of the year in the green, after the worst start ever to a year. The Dow's quarterly comeback would be its biggest reversal since 1933.

Another factor that could continue to push stocks higher is short interest that's "still higher than it was March 2009," Lee said Thursday, adding that a "stubborn" $1 trillion being sold short could get wiped out when those positions are covered.

"We're [also] finally getting positive retail investor flows," he said, arguing that even technical analysts are less bearish.

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