One of the market's biggest skeptics is going back to his old ways.

Morgan Stanley strategist Mike Wilson cautioned that the rally that has enveloped markets in recent weeks is long in the tooth and overdue for a breather.

"As predicted, falling interest rates at the back end have led to modest, further gains for this bear market rally," Wilson wrote in a new note on Monday. "However, with last week's price action, the S&P 500 is now right into our original tactical target range of 4000-4150. While the index has modestly exceeded its 200-day moving average and the breadth continues to expand, the downtrend from the beginning of the year remains in place. This makes the risk-reward of playing for more upside quite poor at this point, and we are now sellers again."

Several weeks ago, Wilson correctly predicted the market's bounce. And after a brutal year for investors, the rally has been much welcomed.

The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) are up more than 6% and 7%, respectively, in the past month while the Dow Jones Industrial Average (^DJI) has tacked on 5%.

Gains have been spurred by a pullback in the U.S. dollar, signs of peak inflation, and a Federal Reserve that may be on the precipice of slowing the pace of interest rate hikes.

But a hotter-than-expected November jobs report last week — which calls into question the potential for a more dovish Fed — and renewed COVID-19 lockdowns in China have dented that bullish thesis.

"Stay defensively oriented (Healthcare, Utilities, Staples) as rates are likely to fall further into next year as growth and inflation continue to slow," Wilson advised. "Growth stocks are unlikely to benefit from falling rates from here given risk to earnings, especially for tech and consumer-oriented businesses which are large weights in growth indices."

Other strategists on Wall Street are also staying cautious on stocks to round out 2022.