Watch for a dead cat bounce in some of the former high-flying Internet and biotech names, but any rebound may be short-lived.
Even if the market does get a lift, it needs a catalyst to sustain any gains, and traders are looking to the start of earnings season. Alcoa reports Tuesday after the close, and JPMorgan Chase and Wells Fargo report Friday.
Stocks have sold off amid concerns the economy will not accelerate enough to offset the impact of the Fed pulling back from its quantitative easing program. That worry was compounded after Friday's March jobs report showed 192,000 jobs, just about what was expected, but traders had been hoping for a strong snap back from sluggish hiring in the winter months.
"I don't think earnings are going to disappoint," said Milton Ezrati, market strategist and economist at Lord Abbett. "They may show people that the world's not going to come to an end just because names in social media are blowing up." Ezrati said besides the overvaluation in Internet, social media and biotech stocks, the market is skittish about the situation in Ukraine and fears that Russia will move into the country, after seizing Crimea.
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Stocks were slightly higher Tuesday morning with the biggest gain in the Nasdaq. The market sold off hard Monday, with the Nasdaq and Russell 2000 once more leading the way. Nasdaq fell 1.2 percent to 4,079, capping its worst three-day streak since November 2011. The Dow was off 1 percent at 16,245, and the was off 1 percent at 1,845.
"After Friday and (Monday), we're going to reach viciously oversold levels so I would not be surprised to see a bounce in some of the high fliers," said Gina Martin Adams, institutional equity portfolio strategist with Wells Fargo Securities.
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Michael O'Rourke, chief market strategist at Jones Trading, said the signs of a bounce were evident in the final hour of trading Monday, when some momentum names turned around.
"It feels like these momentum names which had been leading were trying to find a bottom today, and they definitely outperformed the market in the last hour," said O'Rourke. "I would not be surprised if they tried to bounce. I'm not sure about the tape. I think the S&P has some work to do but these momentum names could bounce. Longer term, I don't like them."
O'Rourke said the momentum plays could also see a lift from short-covering as they start to rise. "I think if they start bouncing, you'll get a little short squeeze, and that will feed the rally for a few days, and there will be people that sell into it ... the short squeeze is going to be a big catalyst before the big sellers come back."
Some of the momentum names are down more than 20 or 30 percent since early March. Netflix is down 26 percent since March 4; Vertex Pharmaceuticals is down 20 and Red Hat is down 17 percent. Splunk was off 35 percent in that period, and it moved higher after the closing bell Monday following a 3.4 percent intraday decline. Pandora is off 32 percent since March 4 and Workday is off 30 percent. Zynga is off 26 percent, and 3D Systems is off 29 percent.
"These themes that have been the drivers of performance in the past six months, I'm seeing them disappear," O'Rourke said. "The question is where is the new leadership coming from with the better performing sector year to date—utilities." Utilities are up more than 8 percent year to date, followed by health care, up 3.3 percent.
Most analysts don't foresee a major correction though choppiness could continue.
"The tapering wasn't the disaster traders thought it was, and it still isn't the disaster traders thought it was," said Ezrati. "The nonsense that the economy was beginning to accelerate was realized to be just nonsense."
He said as valuations shakeout in bubbly Internet and biotech names, there are groups of stocks he still likes. "We still see value in cyclically sensitive names—industrials, technology, consumer discretionary as opposed to the staples."
Adams and others say the combination of the Fed's tapering of its bond-buying program with a lack of consistently strong economic data has left the market looking elsewhere for a catalyst.
"It's time to transition to some real force of earnings growth. ... We expect a choppy market anyway because the Fed is shifting gears. I think you have to expect this could be a pretty difficult period because the Fed is shifting gears, and then it's up to earnings and the strength of earnings gains to drive the market," she said.
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Capital spending will be watched closely. "Our expectation is that the consumer while not out of the game, they're not likely to drive the next earnings growth," she said.
"It's got to come from capital spending. Sectors like technology, industrials and materials are going to have to have to show an improving outlook in this earnings period, and it's about their forward-looking commentary. Myself and investors are expecting first-quarter earnings to be fairly ugly.
This is a quarter where companies are going to take the easy excuse where they can and when it comes to forward guidance that excuse has faded and it's time to pony up."
Adams said a sector she likes now is chemicals. During periods where valuation fades as a driver for stocks, chemical companies are among the most profitable.
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Alcoa is the first major company out of the gate for the first quarter. It is expected to report a profit of 5 cents per share, 53 percent below last year's level. Revenues are expected to drop 5 percent to $5.55 billion, according to Thomson Reuters.
Earnings for the S&P 500 are expected to grow by just 1.1 percent this quarter, and revenues are expected to rise 2.7 percent, according to Thomson Reuters.
—By CNBC's Patti Domm. Follow her on Twitter @pattidomm.