This year, the S&P 500 is down more than 21%. But it has also seen weeks where stocks have rallied more than 5% despite expectations of slower economic growth. Such bear market rallies are well suited for investors to sell stocks ahead of a more severe bear market, according to Madison Faller, global investment strategist at JPMorgan Private Bank. “A lot of the rally we’ve seen in the last week has been largely technical,” said Faller, referring to trading stocks based on chart patterns rather than analysis. finance of companies. For example, the SPY ETF, which tracks a large-cap US index, has gained more than 5% in a week four times this year and twice more than 7%, according to data from Koyfin. “I would definitely use that level of risk to reduce my portfolio risk,” says Faller. “I don’t think they have a really solid base at the moment.” Why sell stocks? The strategist, who advises clients at the investment bank, said that while the financial system did not have “widespread cracks”, she was concerned about further tightening of monetary policy. This affects the economy which is lagging behind. She added that JPMorgan Private Bank expects a continued recession into mid-2023 for the economy. “If we see the S&P 500 drop to 3500 [points], which is when a milder recession is likely to be bearish. “The index is currently around 3,750. Last week, Bank of America also advised clients not to trust the recent market rally as their research indicated that the stock market would continue to fall. Hedge fund manager Dan Niles also reiterated his belief that the S&P 500 will bottom out at 3,000, but he said shares will rise this month through Oct. Stock analysts will lower their estimates after large-cap tech companies report third-quarter results. “I think we need to see more earnings declines before we there’s actually a very strong bottom in the stock market,” Faller said, echoing other major market participants. high-quality investment-grade bonds 10-year Treasury yields hit a 14-year high on Friday, pushing corporate bond yields even higher. reverse ely bond to profit. Faller believes that companies with good credit ratings are unlikely to default in the current and undervalued economic environment. On Wednesday, BlackRock advised its clients to jump on a “short-term” opportunity in the fixed-income market. The world’s largest asset manager says that as the market is witnessing “maximum rate pessimism,” it has seen value in some of its short-term bond funds such as: iShares Short Warehouse Silver ETF: It consists of bonds that mature in less than a year. iShares 0-5 Year TIPS Bond ETF: It has exposure to short-term US Treasury Protected Securities (TIPS). iShares 1-5 Year Investment Corporate Bond ETF: It is related to US corporate bonds with maturities from 1 to 5 years.