The Wall Street strategist that nailed the 2023 bull market is mulling a boost to his 2024 price target after a strong January

• Fundstrat's Tom Lee said the S&P 500 could significantly exceed his 2024 year-end price target of 5,200.
• Lee said a positive January for the stock market bodes well for further gains throughout the rest of the year.
• "If the January barometer is right, the upside to our S&P 500 target is possibly as high as 5,500 or more," Fundstrat said.

The stock market's positive return in January suggests to Fundstrat's Tom Lee that his year-end S&P 500 price target of 5,200 may be too low.

Lee has been one of the most bullish strategists on Wall Street over the past year, and he nailed the bull market rally in 2023 when most other strategists were worried about a potential recession.

According to Lee, the stock market got off to a rocky start this year, with the first five trading days of January generating negative returns after a strong Santa Claus rally. When those trading indicators flash negative, it's typically a bad sign for stocks for the rest of the year.

But with the S&P 500 on track to rise more than 2% in January, the so-called January Barometer has overturned both negative trading indicators, according to Lee.

"The full year tends to play out in the first part of the year, meaning what happens in January tends to tell us a lot about the year," Lee said.

Lee crunched the numbers and found that since 1950, there have been 13 instances when the S&P 500 saw a prior-year return of more than 15% and a positive return in January, as has happened this month. The full-year returns afterward were incredibly strong, with a median gain of 16% and a win ratio of 92%.

"I think this is confirming we're on track for double digit gains in 2024, so a very good sign," Lee said.

The only sour year for stocks during this scenario was in 2018, when the Federal Reserve tightened financial conditions too much and sent stocks reeling 20% in a matter of weeks. This time around, Lee observed that the Fed has now entered easing mode, with interest rate cuts on the horizon.

If Lee is correct, then the gains he expects are coming would catapult the S&P 500 to around 5,500, which is well ahead of Lee's already bullish call for the index to end 2024 at 5,200.

"If you don't think the Fed is making a policy error, it's a great year for stocks ahead. Possibly we're too low, because we think it's 5,200. Now maybe it's 5,400 to 5,500," Lee said.