The hesitancy of the market to creep past resistance levels has investment advisors altering their strategies.
Dennis J. Barba, managing partner at The Oxford Group, is counseling municipal bonds as a safety measure until the markets can find a clear direction. Barba sees trouble ahead for the stock market as credit issues continue to wash through and housing continues to struggle.
"People are starting to get complacent again," Barba says. "My gut's telling me that the last week or 10 days people seem to have selective amnesia, forgetting what we've been going through since last September."
Other advisers are having their clients hedge on market weakness through fixed-income instruments like structured notes.
Kathy Boyle, president of Chapin Hill Advisors, likes those types of cash positions in times like these, while also advising clients toward exchange-traded funds and mutual funds that have both long and short positions on various aspects of the market.
Among those in that category are Diamond Hill Financial Long-Short Fund and the Prudent Bear Fund. Boyle thinks the overall market is headed for a double-bottom, despite the sentiment of some bulls riding the recent surge.
"I think that everybody's hoping that this is the end, but in my opinion there's going to be another shoe to drop," she says.
Michael Cohn, of Atlantis Asset Management, shares the bullish belief that the worst is over for the stock market, but a sustained rally will be tempered by the reality that the worst hasn't passed yet for the economy.
"I think we're going to be range-bound through the summer," Cohn says.
Cohn likes some beaten-down sectors, including health care. While not advocating specific plays, Cohn identifies the leaders as Medco and Genentech.
But Cohn says oil and food costs will continue to hamper market gains, with the recent round of stimulus checks sent to American taxpayers as doing little to ease the pain.
"The lion's share of those rebate checks are going to go into people's gas tanks and people's refrigerators," he says. "That does nothing to spur the economy."