The U.K. has yet to make a formal request to leave the EU, by invoking Article 50, and who will take over for outgoing Prime Minister David Cameron may not be clear until September. EU officials have said they will not negotiate the exit terms until the U.K. makes a formal request to leave, and Cameron has said that request will have to be made by his successor.
"It's going to be a slow moving train. It's calmed down for now — but it hasn't calmed down," said Ablin. "(The markets are) on heightened alert, but unfortunately it's moving at the pace of policy, not at the pace of the markets."
He said the U.S. stock market may be reflecting more a sell-off from overinflated values than fear about the impact of the U.K. exit.
"Valuations were stretched. So why would small caps be down twice as much as large caps in the U.S.? If you were really worried about Brexit interfering with global trade, you would think the multinationals would be down more than the insulated small guys. I think it was an opportunity to reassess valuations," he said. The small-cap Russell 2000 was down about 7 percent over Friday and Monday.
Wald said he would use market strength to sell the weakest links, and that means banks and European equities. The XLF Financial SPDR Select ETF was up 1.3 percent Tuesday but it's down more than 6 percent for the week to date. European banks, hit harder than U.S. counterparts, were also higher Tuesday.
"The weaker banks just can't find a floor globally. We say if you want to sell, you want to sell the weak technical trends. Of course, we have fallen a lot in a short amount of time. You could make the case we're oversold and bouncing back a little bit there," said Wald. He said on pullbacks he would look to buy market leadership, and he likes the iShares EDGE MSCI USA Momentum Factor ETF, MTUM.
"Where's the momentum right now? The momentum is in a lot of these lower-volatility stocks with bond-like characteristics that are doing well," he said, noting that Johnson & Johnson, United Health and AT&T have all been steadily rising.