Investors can have confidence in stocks' bounce back this week, according to JPMorgan's Chief Global Markets Strategist Marko Kolanovic. "When the omicron news hit the tape on Thanksgiving night there was clearly an overreaction," said Kolanovic, who is also an Institutional Investor Hall of Fame strategist, on CNBC's " Halftime Report " Tuesday. "Markets sold off very rapidly on news that was not very reliable," he added. "And now its basically recovering those back." The major averages pulled back in recent weeks due to fears surrounding the omicron Covid-19 variant, which was first reported in South Africa, and the Federal Reserve's potential accelerated taper of its asset purchases. The market posted its worst day of the year on Friday, Nov. 26th as the omicron threat emerged. This week, the Dow Jones Industrial Average and S & P 500 are on pace for their largest two-day bounce since November 2020. The Nasdaq Composite is up 3% on Tuesday alone. "I think the bulk of the move was omicron, [the] Fed certainly caused some concern but more on the rotation side," he said. Kolanovic also said there is a short squeeze occurring in the market on Tuesday. He said last week some opportunistic funds shorted the market, expecting a sharper and more persistent sell-off. Now, the market is going up and those investors are getting squeezed. Heading into 2022, Kolanovic recommends value and cyclical stocks. He is neutral on technology names due to potential rate hikes in the first half of next year. Kolanovic also recommends emerging markets and European stocks next year.
Traders work on the floor of the New York Stock Exchange.
Investors can have confidence in stocks' bounce back this week, according to JPMorgan's Chief Global Markets Strategist Marko Kolanovic.