Tom Lee Says Investors Are Hesitant To Buy The Dip As Midterm Elections Loom — ‘People Are Marking Their Calendar Until November 3rd’

• Lee said Friday’s market action looked different from previous sell-offs, with some investors potentially being forced to sell while money continues to move into other parts of the market.

• The bigger issue, according to Lee, is that institutional investors are waiting for greater clarity around the midterm elections.

• Lee said the uncertainty could also be keeping some retail investors on the sidelines.

Fundstrat Managing Partner Tom Lee says investors are holding back from buying into the latest stock-market dip as they await the outcome of next week’s U.S. midterm elections.

During an interview with CNBC on Friday, Lee pointed to a lack of conviction among investors until after Nov. 3, with the Nasdaq facing a sharp sell-off.

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Tom Lee Says Investors Are Waiting Until November 3

Lee said Friday’s market action looked different from previous sell-offs, with some investors potentially being forced to sell while money continues to move into other parts of the market.

“Today looks like someone’s getting liquidated,” Lee said, adding that he could not determine whether the selling was coming from institutions or from investors holding heavily concentrated positions in stocks that were falling sharply.

“But at the same time, the equal weight market is rising. So I think there still is plenty of money sloshing around,” he said.

The bigger issue, according to Lee, is that institutional investors are waiting for greater clarity around the midterm elections.

“Our institutional investors just don’t have conviction until after midterm,” Lee said, while adding that he expects that to limit dip-buying in the days ahead.

“So I think between now and November 3rd, it doesn’t take a lot for stocks to fall a lot, because I just don’t know if there’s as much dip buying conviction until after November 3rd,” Lee said.

‘People Are Marking Their Calendar’

Lee said the uncertainty could also be keeping some retail investors on the sidelines.

“Yes,” Lee said when asked whether investors could be waiting to see how the elections shake out. “Because I think there’s a lot of doom-saying about the midterms.”

He pointed to the high stakes investors are placing on the election and said that could make them reluctant to buy stocks even after the recent declines.

“I do think a lot of people are kind of hesitant, hesitant to say, I want to buy this dip at this moment,” Lee said.

He believes investors still intend to buy the dip, but are waiting for the election to pass.