The top J.P. Morgan Chase strategist who told his clients to expect a year-end rally in 2018 acknowledged Thursday that "the month of December proved us wrong," but added that he still sees reason for buying stocks early in the new year.
"Our call for a year-end recovery was based on near-record low equity positioning, near five-year low in valuations, positive seasonality, and two positive catalysts (G20 and the Fed's dovish pivot). All of this was 'too little, too late,'" wrote Marko Kolanovic, global head of quantitative and derivatives strategy at J.P. Morgan.
"It seemed briefly that the G20 and Powell's speech would be sufficient to prod the market into a December rally," he continued. "Instead, already fragile sentiment was undermined by political uncertainty from the US administration, the December FOMC meeting, a slowdown in economic data, and a viciously negative news and social media cycle."