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Market bull Jeremy Siegel warns the Nasdaq rebound will unravel, favors value stocks

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Jeremy Siegel: "This stock market still has a way to go up'

The Nasdaq rebound may last shorter than a New York minute.

Wharton School finance professor Jeremy Siegel sees near-term trouble, saying the backdrop dramatically supports the reopening trade over Big Tech and growth plays.

"I've been extremely bullish here for nine months," he told CNBC's "Trading Nation" on Tuesday. "This stock market still has a way to go up."

But his forecast excludes the tech-heavy Nasdaq, which just returned to positive territory for the year. The index surged 3.6% on Tuesday. Last week, it was in correction territory.

Siegel warns challenges associated with higher interest rates and optimism surrounding economic reopenings will continue to weigh on growth trades.

"I don't think they're going to do badly. We're not going to have a crash like we had 20 years ago at all," he said. "But I think the outperformers are going to be basically non-tech over the next six to 12 months."

In this environment, Siegel prefers groups positioned to profit as rates rise.

"The so-called value stocks are going to be sought out for their yield because I think interest rates are still going to be headed much higher here on the long bond," he added. "I don't think we're done with this rise in these long-term interest rates."

Siegel is reiterating his 2021 epic "bounce back" forecast. He still believes the Dow will hit 35,000 this year, a 10% rise from Tuesday's record close.

"This is just going to be the hottest economy we're going to see in a long time," Siegel said.

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Market bull Jeremy Siegel predicts value stocks will outshine tech