Recent Rally Is "Low Quality", Stay Cautious

Global markets have defied the old adage "Sell in May and go away", especially in Asia where the Hang Seng and Taiwan Weighted indexes both ended the Tuesday session at levels unseen in 6 to 7-1/2 months.

While the positive sentiment may continue so long as Fed chief Ben Bernanke continues to see those "green shoots" in the economy, some analysts tell CNBC there is significant cause for caution.

"The rally has been a good rally, but it's been a pretty low quality rally....There's really nothing from the trade buys to tell you that people feel this is the bottom," James Falkiner, director & CEO of Falkiner Global Investors said on CNBC Asia Pacific's Protect Your Wealth.

"GDP growth is still very negative although it may be slowing," he warned, adding that investors could end up being left high and dry. The rise of non-performing loans continues to be a worry and he feels more water needs to be under the bridge before investors get too optimistic. "Leverage is very high on the balance of both the U.S. and in the UK, and you know we just don't have a lot of growth."

On his preferred picks, Falkiner says there is value in some Australian agriculture stocks like ABB or GrainCorp, and in U.S. technology plays such as Amazon and Google .

He also sees value emerging in Japan in the three to five year period. "This whole crisis is forcing the Japanese government to be more aggressive about their stimulus and valuations are really big nub over there."

Falkiner said he would avoid Australian financials while he finds that it's still too early to be investing in homebuilders and consumer durables.

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Catch "Protect Your Wealth" on CNBC's Asia Pacific network every Tuesday on "CNBC's Cash Flow," Wednesday on "Asia Squawk Box" and Thursday on "Capital Connection."