Are Stocks Near Bear Market? Some Pros See Danger Signs

"There seems to be no norm these days," says Andrew Wilkinson, senior strategist at Interactive Brokers, which specializes in options trading. "They can't be happy, they have to be ultra-happy. They can't be bearish, they have to be ultra-bearish."

Wilkinson says options trading is not indicating a strong winner between bulls and bears. But he thinks the S&P 500 will need to test 1,000 before a clear direction can be declared.

"The market needs a washout before investors will be prepared to jump back in," he says. "That 1,000 level on the S&P is likely to be in my opinion something that would spark buying once again."

Or selling.

Other analysts believe that if the market doesn't find support soon, the floor could be the limit.

"If we don't get a rally this week, batten down the hatches," says Kathy Boyle, president of Chapin Hill Advisors in New York. "The only things that will work are cash and bear funds."

David Rosenberg, chief economist and strategist at Gluskin Sheff, warns that if the S&P fails its 1,040 low on May 25, then a move to the 1,008 Fibonacci level is likely. Fibonacci tests look at trendlines and divide by a series of ratios. Further Fibonacci retracements would happen at  943 and 878.

"And, if we slice below that level, then it is quite possible that what we will endure is a classic retesting phase of the March 2009 lows," Rosenberg writes. "This correction, in all probability, has further to run."

Indeed, other sectors indicate that a bear market is closer at hand than the averages suggest.

Exchange-traded funds that track the energy and financial sectors on the S&P 500 have dropped 17 percent each, while the KBW Banking Index

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[KBE  Loading...      ()   ] is off 19.7 percent.

In fact, some may argue that the bear has never really left the building. The market remains 32 percent from its historic high in October 2007, suggesting the market benefited from a trend expressed in terms only an analyst could love: A cyclical bull inside of a secular bear, which has returned with full force.

Banking analyst Dick Bove of Rochdale Securities revised his prediction that banks would drop 25 percent, expecting them to fall still more even though he rates the big banks a buy and believes they will recover by year's end.

And that may be where the hope rests—that a sharp retracement can set up a buying opportunity and catapult the S&P to an area like 1,250, which is the Goldman Sachs forecast that Cohen announced earlier this year.

"For the long-term investors there are some good buys out there," says Sanders, specifically citing strong tech names in the mid-cap space. "A (13) percent correction is not an extreme movement at all—probably a necessary pause. I would call this a selective buying opportunity."