US Markets

These Trump-rally leaders have 'round-tripped' and are now a buy, Tom Lee says

Closing Bell Exchange: How to play the markets
Closing Bell Exchange: How to play the markets

Energy and financials may have led the market higher Thursday, but they have "essentially round-tripped" since their initial postelection rally, noted strategist Tom Lee told CNBC.

The ETFs that track both financials and energy are down in the past month of trading, with the Financial Select Sector SPDR Fund sinking almost 4 percent and the Energy Select Sector SPDR Fund down just under 3 percent.

"I don't think that there's a change in economic fundamentals so I think energy and financials are especially attractive. I think energy in some ways is making a generational bottom, too," the head of research at Fundstrat Global Advisors said in an interview with "Closing Bell" on Thursday.

While Lee was referring to energy stocks, he also thinks that in five years, he'll probably be saying oil hit a bottom of $26 in 2016

"In order for energy stocks to do well, oil has to recover but I think nominal oil is going to be higher, much higher, than it is today," he predicted.

Oil prices jumped for a third day on Thursday to their highest level in three weeks after Kuwait gave its backing for an extension of OPEC production cuts in an attempt to reduce global oversupply.

West Texas Intermediate crude settled 84 cents, or 1.7 percent, higher at $50.35. Brent crude oil was up 53 cents, or 1 percent, at $52.95 a barrel by 4:28 p.m. EDT, after hitting a session high of $53.10.

'Shallow' pullback

While the stock market closed higher Thursday, it is still down from its highs, noted Lee, one of Wall Street's biggest bulls.

He called that pullback "really shallow." Instead, he's anticipating a 5 to 7 percent drawdown.

Jack Bouroudjian, chief economist and co-founder of UCX, agreed the recent dip hasn't been deep enough.

In fact, he thinks the bond market is sending a signal that something is happening, pointing to the flattening of the yield curve and the failure of two German bond auctions recently.

"I don't know if it means that the Trump trade is tired. I don't know if it's looking for more — maybe it's looking for a legislative print down the road. But somewhere along the line we've got to pay attention to this bond market and it's sending us signals, telling us we have to be careful," he told "Closing Bell."'

— Reuters contributed to this report.