In recent trading days, the US stock market has recovered from last week's sell-off.

AI giant Nvidia's cumulative increase over the past four trading days is nearly 17.42%, with a market cap increase of $423.858 billion.

Recently, Mike Wilson, one of the largest bears on Wall Street and of Morgan Stanley, stated that the US stock market is unlikely to see a big drop and is bullish on defensive stocks benefiting from interest rate cuts.

Wilson stated that while poor seasonality and uncertain growth prospects may limit the US stock market's gains for the remainder of the quarter, the possibility of a total market meltdown is low.

Wilson has been bearish on the US stock market in recent years and has successfully predicted this round of corrections.

On July 9th, he said that a 10% correction was "very likely." One week later, on July 16th, the S&P 500 hit a new high before falling 8.5% and hitting a recent low on August 5th. Currently, the index has rebounded more than 4%.

There is not much room for upside.

Wilson said that traders are still nervous after last week's sell-off, so a major market meltdown is unlikely.

Nonetheless, he still believes that there is not much room for upside for the S&P 500 index, and expects the benchmark index to fluctuate between 5,000 and 5,400 points, down about 7% from Tuesday's level.

"I find it hard to believe that we're going to break to new highs again. I don't think we'll completely break, to where we're going to a new bear market," Wilson said.

He analyzed that slower economic growth, overly optimistic profit expectations, and the Fed's unwillingness to proactively cut interest rates have all posed challenges to further gains in the stock market, which has already risen more than 13% this year.

Bullish on defensive stocks.

In this context, Wilson believes that individual stocks offer more opportunities than the broad market indexes, and recommends that investors buy defensive stocks.

Wilson's recommendation is contrary to the current market consensus, with most investors still following the momentum of technology stocks.

"I'm not that excited about the indexes, which is why we're very focused on the stock and sector level, trying to make money there," Wilson said.

Meanwhile, Wilson continues to advise investors to stay away from the small-cap Russell 2000 index.

He believes that the index's rise last month was another illusion caused by the so-called "unwinding" process, in which investors rotate out of the winning large-cap stocks and cover short positions in small-cap stocks.

He said that the negative technical patterns of the large-cap stocks that emerged subsequently indicate that the rise of such stocks in July was only a flash in the pan.

However, he also added that this does not mean that traders should completely avoid small- and mid-cap stocks, but that they should seek opportunities in these groups and select companies with strong fundamentals.

Wilson reiterated his view that the market is still in the late cycle and the Fed is preparing to cut interest rates in September.

He believes that trade is for maintaining the quality curve and is defensive rather than growth-oriented, because the interest rate cut is most favorable for this group.