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Technical selling to last through September: Trade

Stocks should move higher at year's end, but investors shouldn't jump wholeheartedly into the market just yet, JPMorgan's head of U.S. equity and quantitative strategy said Wednesday.

Dubravko Lakos-Bujas said technical selling pressure will likely continue throughout September as complex, automated trading platforms take advantage of market volatility. JPMorgan expects another $100 billion in outflows on the back of selling pressure, he said.

"We still think that the risk/reward for equities is not that attractive," he told CNBC's "Squawk on the Street." "Over the short term, perhaps take advantage of these dips to buy—partially, opportunistically—but I would still not be in favor of going fully fledged into the market in the short term."

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The selling pressure will likely ease in the historically weak month of October, giving way to a move higher as traders focus on growth prospects for 2016, Lakos-Bujas said.

But for now, markets are locked in a tug of war between technical analysis and fundamental economic data.

"The good news ... is the actual data in the U.S.—whether it's consumer, jobs, confidence, housing—all looks better," Steven Rees, global head of equity strategy at JPMorgan Private Bank, said Wednesday.

Parts of the U.S. market, particularly the domestically focused sectors, are now oversold, he told "Squawk on the Street."

The bank expects 2016 earnings to be better as the drag from lower commodity prices and the higher dollar wears off, ultimately benefiting the consumer discretionary and health-care sectors as well as the financial sector should the Federal Reserve hike interest rates.

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Rees said he would continue to avoid commodity- and emerging market-linked sectors such as industrials and materials.

Chad Morganlander, portfolio manager at Stifel Nicolaus, said he is bullish on U.S. multinationals for the time being following a drop in the dollar from its 2015 peak.

"We will have to keep this in a balance mode and keep it path dependent on the economic numbers," he told "Squawk on the Street." "We think the United States is the best place to invest, and the economy here is starting to kick back in."