Stocks are rallying on the last trading day in January, with the S&P 500 moving out of a correction. The market is on track for a second straight week of gains, but the major averages are still negative for the year.
PNC Asset Management CIO Jim Dunigan tells CNBC's "Power Lunch" on Friday investors need a balanced portfolio now.
"We continue to have a baseline allocation of stocks to bonds of 65 percent equities/ 35 percent fixed income in a balanced account," Dunigan said.
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He expects sentiment to remain gloomy until the mindset changes to being nervous about missing out on a rally.
"Focus on high quality stocks and a tactical allocation to Europe and Japan and a slight overweight to value," Dunigan said.
The pan-European STOXX 600 and the Nikkei closed higher on Friday.