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Top strategist Tom Lee says 'elements' for a year-end rally in place

A man walks past the charging bull statue near the New York Stock Exchange.
Mandel Ngan | AFP | Getty Images

Strategist Tom Lee predicts stocks will ring in 2017 on a happy note, advising clients to buy a group of out-of-favor companies that appear ripe for a fourth-quarter comeback.

"The elements for a year-end rally are in place — defensive positioning, bearish sentiment against early cycle/risk on leadership and outperformance of credit," wrote the head of research at Fundstrat Global Advisors, in a note Thursday.

Since the S&P 500 reached a record price of 2,193 in August, the index is down 2.4 percent amid concerns about the upcoming presidential election and the future path of interest rates.