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Power Play: What to avoid in this market

A trader works on the floor of the New York Stock Exchange.
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A trader works on the floor of the New York Stock Exchange.

Stocks are rallying again on Friday, with the S&P 500 on track for its best week of 2015. For the year, the Dow and S&P are up slightly, while the Nasdaq is up 7 percent.

James Liu, global market strategist with J.P. Morgan Funds, tells CNBC's "Power Lunch" on Friday he expects market gains to be slightly better in 2016.

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"The base case for next year is actually mid-to-high single digit U.S. equity returns. This is because we expect earnings to bounce back from a low base," Liu said.

He likes financials, tech and consumer discretionary stocks, but is avoiding health care.

"I don't dislike health care, but it's become too favored amongst investors. I would continue to stay away from energy until we see real signs of oversupply declining, or evidence that OPEC will budge," Liu said.

Financials, tech, consumer discretionary and health care are higher during trading, while energy is lower.