The recent market downswing could give way to a big two-month rally, according to Tom Lee, managing partner at Fundstrat. "The softness in equities since mid-February has not yet reversed, but we believe the window is soon emerging where this softness will give way to an 8-week period where equities will rally strongly," Lee said in a note to clients Thursday. "This is a scenario that many investors are hesitant to embrace (more likely skeptical) because of the understandable lack of clarity on inflation trajectory, Fed policy path, earnings risk and general heightened concerns about recession." Stocks started the year off strong as investors looked to turn the page from a losing 2022. The S & P 500 had its best January since 2019 with a 6.2% advance. Meanwhile, the Nasdaq Composite recorded its best January since 2000, gaining 10.7%. The Dow Jones Industrial Average ended the month up 2.8%. But the market took a leg down in February, as the latest economic data showed inflation and the job market remained hot. The Dow led the indexes lower in the month, posting a 4.2% loss. The S & P 500 and Nasdaq Composite shed 2.6% and 1.1%, respectively, last month. .DJI YTD mountain Dow Industrials in 2023. Labor and inflation data in the past month showed unwelcomed stickiness that concerned investors hoping the Federal Reserve would slow down its rate hiking campaign. Lee said data on labor unit costs should be the "last of the 'hot' inflation data," expecting cooler numbers in the near future. He also said the bond market will pivot to reflect a less-aggressive Fed in terms of monetary policy. The 2-year Treasury bond yield hit a high not seen since 2007 in Thursday's session. Softer data could also mean bond volatility and the Cboe Volatility Index (VIX) — Wall Street's preferred fear gauge for the stock market — should fall. This would support a rally. He also said those who call the stock market expensive may be using confirmation bias to stay on the sidelines. Lee said the bond market is still more expensive than stocks when comparing price-to-earnings ratios.