JPMorgan believes the odds of a market correction are elevated, advising investors to remain cautious.
"Further downside to U.S. equities in the short term remains the likely path," the firm's Dubravko Lakos-Bujas wrote in a recent note to clients. "We estimate that a total correction of roughly 10 percent is not unreasonable."
One of the reasons for the bearishness is the "contraction phase" of the firm's Composite Macro Indicator (CMI), primarily driven by soft growth and sentiment indicators.
According to the firm, the current economic cycle resembles episodes in the years 2011, 1998 and 1986, when the economy experienced a significant deceleration without falling into a recession.
Another reason for concern is the length of the bull market avoiding a correction, said Lakos-Bujas, head of U.S. equity strategy.