Fidelity's Timmer: Why stocks can't escape 'purgatory'

With stocks rebounding from their February lows — though poised for a weekly decline — it's hard to say whether equities are in a bear market or a bull market. That's the conclusion of Jurrien Timmer, director of global macro strategy at Fidelity Investments.

Timmer told CNBC's "Worldwide Exchange" on Thursday that markets are stuck in "purgatory," until central banks can get on the same page. "We're in between a bull market cycle and a bear market cycle."

"We're now sort of getting to the high end of the range but it's still a range," Timmer said, referring to a S&P 500 range between the 1,800 and 2,100 levels. "I don't see the catalyst for us to break out of that in the long term."

The seven-year bull market has been stalled by what Timmer calls a "policy divergence" between the Federal Reserve and other central banks. It started with the People's Bank of China devaluing its currency in August, he said.

"That kind of pushed the Fed back in terms of not tightening in September," Timmer said. "This policy divergence has to kind of play itself out, and then I think we can get back on track."

The see-saw expectations for a U.S. interest rate hike are keeping markets in a holding pattern, Timmer said. The Fed raised its target interest rate for the first time in almost a decade last December, leaving rates unchanged since.

"We continue to have this back and forth," he said. "Things quieted down when the Fed went in December, then things got shaky again."

Fed Chair Janet Yellen was dovish after the central bank's March meeting last week. She cited global economic data that's given the Fed pause, despite compelling economic data out of the U.S.

The next likely Fed hike is in June, Timmer said, but he added it's still a coin toss based on economic data. "We're back into the same mode of how the numbers stack up."

Earnings growth that spurred the bull market has been battered in the global oil collapse. Prices had been gaining ground since their Feb. 11 bottom, but on Wednesday, West Texas Intermediate crude fell 4 percent.

"There's so much debt involved in putting all these drill rigs into the ground," Timmer said. "When oil went to $30, it causes a lot of pain in the credit market and in the stock market."