But if history is any indication, this type of price action could spell new highs ahead.
Since 2014 began, the S&P 500 has had four big v-shaped reversals right after hitting all-time highs. After those sharp selloffs and rebounds, the S&P 500 subsequently broke out, rallying to even higher highs.
In the most recent selloff, the S&P 500 went from a then-record high of 2,019 on Sept. 19 down to 1,820 on Oct. 15. It took the index only two weeks to return to that level and it continues to gain.
According to one money manager, the broad market index has a little bit more room to run.
"We are going to move higher," said Chad Morganlander, portfolio manager at Stifel Nicolaus' Washington Crossing Advisors. "Our price target is roughly 2,100 by year-end on the S&P 500."
Driving the index's gains will be stronger earnings growth, employment data, and the overall state of the economy, Morganlander said. He anticipates higher highs and higher lows over the next 12 months.
However, investors would be wise to be tactical in what stocks they choose rather than just buying the overall market, he recommends. "Valuations are not extremely cheap from an historical perspective," he explains. "You want to start moving up the quality spectrum with the individual investments you have."
For Morganlander, that also means avoiding volatile names, particular one type of stock. "Stay away from momentum at this point," he warns.
The technicals are also bullish from here, according to the chart work of Steven Pytlar, chief equity strategist at Prime Executions. But Pytlar's target for the next couple of months is a little more conservative than Morganlander's.
Pytlar sees the S&P 500 as trading in a well-defined upward-sloping trading range over the last couple of years. "That tells us that it can continue higher," he said. "Looking to the end of the year, we would be looking at something like 2,050 – 2,070 on the S&P ."
At that point, the index will be at the upper end of the trading range. Each time that upper bound is tested, the S&P 500 has corrected and consolidated, Pytlar said.
And the fact that index is now above its September high around the 2,000 level is also a plus, he added. "Being able to hold that psychologically important big round number level is important over the last few days," Pytlar explained. "It shows that buyers are returning to stocks even though they are not at all-time highs. It begets more accumulation and we think higher prices moving to the end of the year as well."