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Choppy Summer for Markets, So 'Buckle Your Seatbelts'

Investors who have been frustrated by the market’s unpredictable zigzag trading pattern should brace for further disappointment as strategists expect continued choppiness in the months ahead.

Caroline Purser | Getty Images

“Investors can expect persistent volatility for the foreseeable future—buckle your seatbelts,” said Mark Martiak, senior wealth strategist at Premier/First Allied Securities. “It’s going to be continued ro-ro (risk-on, risk-off) trading.”

Equities have hit a number of milestones in the last month. All three major indexes logged their biggest gains last week for 2012, less than a month after logging their biggest weekly losses.

And the S&P 500 and the Nasdaq have alternated between gains and losses just in the last six trading sessions, another sign of the ongoing market volatility.

Probably the most annoying fact for investors is that the large fluctuations have only translated to a month-to-date gain of just under 1 percent.

“We’ve been gyrating around the 1,320-level on the S&P 500,” noted Todd Salamone, director of research at Schaeffer’s Investment Research. “We’re trading on the headlines, of course, and what that means is that we’ve been in a choppy environment which is frustrating for both bulls and bears.”

In addition, the anemic trading volume has intensified the market swings, which have largely been dictated by headlines from the euro zone.

“At these levels, people who have been burned in the past don’t want to commit,” said Salamone. “But more clarity could move investors off the sidelines.”

The three events that investors are watching in the next few weeks for further market clarity will be Greece’s election this Sunday in addition to the Federal Reserve’s FOMC meeting and G20 summit next week.

But some market pros warned that the events will only add to further confusion and raise more questions for already-nervous investors.

“[Market volatility] will certainly continue through at least the Presidential election,” said Keith Bliss, senior vice president at Cuttone & Co. “There’s going to be a lot of choppiness leading up to [November] and I definitely don’t think we’ll reach any type of viable resolution in Europe for a long time.”

So what is a nervous investor to do during such uncertain times?

“Search for low-beta equities and yield,” suggested Martiak, also recommending investors to consider fixed income, non-government sectors, high-yield corporate bonds and municipal bonds. “Growth will likely stay subdued and investor confidence is going to remain fragile.”

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Questions? Comments? Email us at marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC Senior Commodities Correspondent and Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.