Don’t be fooled into believing that the rally in US stocks is the beginning of a new bull market, according to Morgan Stanley’s Michael Wilson.

Wilson, among the most bearish voices on Wall Street, says there’s too much evidence, both fundamental and technical, pointing to market problems ahead. He’s urging investors not to get carried away in the latest upswing, which saw the S&P 500 briefly push above 4,200 points last week, its highest level since August 2022.

“Is this finally the breakout to confirm a new bull market? The short answer is no,” Wilson said. “There are many technical signals and fundamental factors that conflict with that idea,” he said, citing lofty valuations, a narrow breadth of stocks driving the rally and the outperformance of defensive stocks.

Wilson was ranked No. 1 in last year’s Institutional Investor survey for correctly predicting the slump in stocks. However, his call for further declines in the first half has proved wrong with the S&P 500 gaining over 9% so far in 2023.

Wilson said a resolution in the debt-ceiling negotiations may drive stocks higher in the short term, but “we would view that as a false breakout/bull trap.”

Others, including JPMorgan Chase & Co. strategists led by Dubravko Lakos-Bujas are also warning about more market volatility as negotiations in Washington drag on. President Joe Biden and Republican House Speaker Kevin McCarthy are set to meet Monday.

Bank of America Corp. strategist Savita Subramanian on the other hand, is holding to a bullish view. She raised her year-end target for the S&P 500 to 4,300 points — about 2.6% above Friday’s close.

--With assistance from Michael Msika.