By Senad Karaahmetovic
JPMorgan equity strategists reaffirmed their earlier stance that U.S. stocks will likely peak in Q1. Stocks are unlikely to receive the fundamental confirmation needed for the rally to extend in the second half of the year, the strategists wrote in a note.
"We believe that what was a still resilient market backdrop earlier in the year, given light positioning, activity pickup, and supportive seasonals, is expiring. While parts of the market look short-term oversold, and there could be potential relief bounces, we advise to use these to sell into," they said.
The strategists believe stocks are unlikely to hit a fundamental low "until the Fed is well advanced with rate cuts."
"Equities typically do not tend to bottom before the Fed has stopped hiking. In fact, the low would not happen before the Fed was well advanced with cutting," they added.
Finally, the strategists advised JPMorgan's clients to be defensively positioned while value is expected to underperform as yields continue to move lower.