Marko Kolanovic, JPMorgan Chase & Co's global head of quantification and derivatives strategy, said before Monday's rally in US stocks that he expected the stock market to rebound sharply this week, enough to recover all of last week's losses.

Specifically, he believes that low investor sentiment, corporate buybacks and favorable seasonal trends will push the stock market higher. The rebound should be large enough to erase last week's decline of about 5 per cent.

"given weak investor sentiment, low positions, systemic strategic buying, seasonality and overselling, we believe the risk tends to be a short-term rebound in the stock market," Kolanovic said in a report on Monday. He also expects the rebalancing of fixed-weight portfolios at the end of the month to lead to large inflows into the stock market.

Other positive factors for the stock market this week include option-related buying after monthly expiration and a reversal of the massive short selling in Gamma last week.

"the buyback peak was interrupted last week, and the positive role of buybacks will increase in the future," he said. This should help the market rebound this week and reverse last week's decline. JPMorgan Chase & Co had previously estimated that US corporate buybacks would reach a record $1,000bn this year.

Another reason Kolanovic is bullish on the stock market is that he expects corporate earnings to continue to grow, which is ultimately a key factor driving share prices higher. Because of rising input costs, he slightly lowered his earnings per share forecast for the s & p 500 from $235 to $230 in 2022, but that still represents an annual growth rate of about 10%.

To prepare for the upside of the stock market, Kolanovich recommends that investors adopt a barbell strategy for their portfolios and hold both traditional growth stocks and traditional value stocks, which have favorable attributes in most factors.