One of Wall Street's top stock strategists, Marko Kolanovic of JPMorgan, is calling for a market rally in the short run after a seasonally weak period partly due to tax-related selling. "While we slightly reduced our record equity allocation, we remain constructive on equities and think that a near-term rally is likely, particularly in small-cap and high-beta market segments," JPMorgan's Kolanovic said in a Tuesday note. The S & P 500 fell more than 2% during the four-day holiday week as investors digested mixed earnings results from major banks and rising inflation. The widely followed strategist believes part of the sell-off came from the need to raise capital to pay taxes ahead of the Monday April 18 deadline. "Last week there was selling to meet tax payments, and which further weighed on markets, but is now over. This effect can be noticed in the historical seasonality chart, and is followed by a bounce in the second half of April," Kolanovic said. Small caps are already on the rise Tuesday with the Russell 2000 gaining 1.7%, outpacing the S & P 500 and tech-heavy the Nasdaq Composite. Kolanovic gained a wide following after correctly calling the March 2020 market bottom and the subsequent rebound during the pandemic. He was promoted to chief global markets strategist from the bank's head of macro quantitative and derivatives strategy in 2021. The top-rated strategist said it's time for investors to buy stocks that have both growth and value attributes. For example, energy and metals and mining stocks were known for being value names. While they are still cheap, these stocks are also growing earnings, Kolanovic said. Meanwhile on the growth side, most international growth stocks, and many domestic ones, have sold sufficiently over the past months that they now are starting to have positive value scores, Kolanovic said. He added many China technology stocks and ADRs are trading at all-time low multiples.
Traders on the floor of the NYSE, April 7, 2022.
One of Wall Street's top stock strategists, Marko Kolanovic of JPMorgan, is calling for a market rally in the short run after a seasonally weak period partly due to tax-related selling.