The equities market and stock exchange traded funds are in the midst of a robust rebound, and the bears are growing louder in their predictions of another correction. With the major broad market indices returning to pre-financial crisis levels, it may be safer to keep some defensive ETF picks on hand.

Adam Parker, U.S. Equity Strategist at Morgan Stanley and the most accurate market forecaster for 2011, believes that “risk aversion” is making a comeback for the second half and into 2013, reports Matt Nesto for Yahoo! News.

“We think the risk-reward is skewed to the negative as the year unfolds,” Parker said in an interview on Breakout.

“Timing is everything,” Parker added. “Cyclicals had really become cheap relative to defensives but they’ve really snapped back.” [Sector Rotation Favors Riskier ETFs]

Parker projects a year-end S&P 500 target of 1167, or a 19.6% drop off Tuesday’s close.

Investors looking for defensive positions should consider SPDR Utilities Select Sector Fund ETF (NYSEArca: XLU) and SPDR Health Care Select Sector Fund ETF (NYSEArca: XLV), since they deliver “more achievable estimates, higher cash balacnes, higher dividends,” Parker advises.

The defensive utilities ETF XLU gained 14.3% over 2011 as investors sought safety from the heightened market volatility,  but it is down 1.1% year-to-date after investors turned back to riskier equity plays. However, XLU gained 1.5% over the past week as the S&P 500 hit new highs.