“Many are still leaning more toward long positions than they would like, to reduce the likelihood of losing in a year when narrow strength in mega-cap stocks has boosted benchmarks,” they said, although the confidence level may have decreased a bit in the last week.
Morgan Stanley maintains its 3,900 price target for the S&P 500 by the end of the year and believes the best way to position itself is a bar of defensive growth stocks with stable earnings and late-cycle cyclical stocks such as energy stocks.
Wilson, one of Wall Street’s most bearish voices, said positive market sentiment depended on current stock prices holding up in the near term.
“If it doesn’t, we could see positioning shift quickly toward profit-taking and/or relative performance later in the year,” said Wilson, chief U.S. equity strategist at Morgan Stanley.