The Zhitong Finance App learned that on Wednesday local time, J.P. Morgan Chase sent a clear buying signal for the US stock market because its US tactical position monitoring indicators showed that clients' risk exposure to US stocks had reached a level reflecting the attractive structure of the S&P 500 index. The bank's new report indicates that in the past four weeks, the S&P 500 index, which experienced similar position changes, rose by an average of about 3% over the next 20 days, while the average increase over all time periods was about 1%.

This week, the US stock market rose due to strong corporate performance, helping the S&P 500 index get rid of three consecutive weeks of decline. The market's focus is on large technology companies, particularly the financial reports of Meta Platforms Inc (META.US) and Microsoft (MSFT.US) and Alphabet (GOOGL.US), which will be released after the market closes on Thursday. Meanwhile, the latest data on the personal consumer spending price index will be released on Friday, and investors will use this to look for signs of easing price pressure.

J.P. Morgan Chase's Andrew Taylor wrote in the report: “The tactical rebound appears to continue, and the big tech earnings and personal consumption spending data released this week will be the key.” He added: “If these data all perform well, the market may be overheated, but at present, it seems that the market has begun to buy on dips.”

Taylor also mentioned that the current market pattern is similar to August and October of last year, when US stocks also experienced a rebound.

Although it's not unusual for J.P. Morgan Chase's different teams to hold different market views, this difference of opinion has been particularly evident since last year. For example, in August of last year, the trading desk team predicted that the S&P 500 would reach a new high, and chief market strategist Marko Kolanovic was still bearish at the time.

According to information, Kolanovic recently stated that the decline in the US stock market in the past three weeks was the beginning of a sell-off. As macroeconomic risks such as rising US bond yields, the strengthening of the US dollar, and rising oil prices intensify, the sell-off is likely to intensify.

The strategist said that although the results announced by US companies this week may temporarily stabilize the market, this does not mean that the stock market is out of trouble. He believes that factors such as complacency about stock market valuations, high inflation, weakening expectations for the Fed's interest rate cuts, and excessive optimism about profit prospects have all increased the downside risks in the stock market.

In a report to clients, he stated: “The stock market pullback is likely to continue. Market concentration is very high and positions are expanding. This is usually a red flag, and there is a risk of reversal.” A market pullback is generally defined as a fall of 10% or more.

It is worth mentioning that Marko Kolanovic's views on US stocks have not been realized for two consecutive years. He was bullish for most of 2022, then took a bearish stance when the S&P 500 rose 24% last year.