Koesterich said he expects the rally to run out of steam in the near term, and while gains should not be large this year, the market can move higher. "We're in the back half of the bull market, and the back half of the bull market is often accompanied by more volatility, but I don't think it's over yet," he said. "I don't think this is going to be a year of double-digit gains. I think people have to have modest expectations of where we are in the bull market. I think you're going to make more money in stocks than cash, and I think the bull market can continue."
A batch of better than expected U.S. data, including Friday's February job gains of 242,000, has helped dash expectations that the U.S. economy is heading into recession, and that has helped lift stocks. Also helping was a strong move higher in crude, up more than 4.5 percent for the week. West Texas International crude futures closed above $35 Friday, a key psychological and technical level traders had been watching.
"We're (the S&P) almost flat on the year. Oh, what a difference a bottom in oil and a little bit of recovery in economic expansion can make. At least the economy stopped getting worse just around the time oil bottomed," said Gina Martin Adams, institutional equity strategist with Wells Fargo Securities. "This is still a case for further upside. But what we have to see is earnings recover. … The reality is the market started breaking down when earnings started breaking down. Earnings need to recover to justify a major uptrend in stocks."
Read MoreBeware this investing mistake: Strategist