Sell the rallies, JP Morgan says again

The good thing about a bounce in markets sometimes is that it can be traded, but "don´t overstay your welcome" strategists at JP Morgan said on Monday to clients.

On the positive side of things, by their estimates the forward price-to-earnings multiple for global equities had fallen "significantly" since the end of November. It had moved out of expensive territory and back to fair-value, which was a step in the right direction, JP Morgan´s Mislav Matejka said.

Nonetheless, they told clients "don’t overstay your welcome in the bounce, though. We reiterate our stance since November that the key strategy for the foreseeable future is to sell these rallies."

By their count, historically the average fall for the S&P 500 during a downturn was on the order of 29% over 14 months, with a 22% reduction in forward earnings per share and a trough PE multiple of 11.5 times.

Neither was it time yet to get optimistic on commodities, Matejka added.

"Current market moves are far from pricing in an adequate probability of a downturn. We still think it is too early to close the short on commodities, wait for USD to peak first. We are comfortable buying Telecoms and Utilities from a medium-term perspective."