'Don't buy the dip yet,' strategist says

  • Investor complacency over the past few days shows it isn't yet time to buy the dip, says Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets.
  • For now, Calvasina's advice to investors is to slowly invest in defensive stocks.

Investor complacency during the market's sell-off shows it isn't yet time to buy the dip, Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, told CNBC on Thursday.

"I actually sensed complacency yesterday. I was out seeing investors yesterday, wasn't looking at my phone all afternoon, got back to the office — was absolutely shocked at how much tech had gone down," Calvasina said on CNBC's "Fast Money."

"I wasn't sensing that investors were really paying much attention to it in my meetings. That tells me we've got a little ways to go," she said.

The tech sector's drops on Wednesday were nothing to sneeze at. Tech shares fell more than 4.5 percent on Wednesday, marking their worst day since 2011. The sell-off led to the Dow sinking more than 800 points and the S&P 500 dropping more than 3 percent. The major indexes fell on Thursday after some of the tech names failed to recover from steep losses in the previous session.

The Dow Jones Industrial Average closed 545.91 points lower at 25,052.83, bringing its two-day losses to more than 1,300 points. The S&P 500 dropped 2.1 percent to 2,728.37 and posted its sixth straight decline. The broad index also closed below its 200-day moving average for the first time since April. The Nasdaq Composite pulled back 1.3 percent to 7,329.06 and briefly entered correction territory at its lows on Thursday.

"On the tech stocks ... when people stop arguing that they're secular and they don't have any secular components, there is just so much pushback on the perfection of the fundamentals. That has got to break before you can go back in and buy that sector," Calvasina said, readily admitting she is a tech bear.

Looking outside of the technology sector, Calvasina said she felt materials still looks very expensive relative to cash flow, and there is likely "more damage to be done in that space."

But on the whole, valuations should not be a reason to buy or sell right now, since "we aren't even back to cheap valuation territory yet," she said.

For now, Calvasina's advice to investors is "don't buy the dip yet," and slowly invest in defensive stocks.

"We think you should be tiptoeing back into those defensives — we've been telling people that for a while. People have to get past their rising rate fears, though," she said.

— CNBC's Fred Imbert and Alexandra Gibbs contributed to reporting.