One issue that Deshpande sees as troubling is a lack of selling in passive ETFs that have accompanied previous bottoms. In fact, he said, flows over the past few days in equity funds have been modestly positive, indicating that sentiment hasn't turned negative enough yet to indicate that the end of selling is at hand.
"The passive fund flows as a sentiment indicator are highly correlated with market returns, which indicates that significant selloffs might be exacerbated by these flows," the Barclays analyst wrote. Dehspande said ETFs took in nearly $1 billion in assets on Wednesday and Thursday. "Thus this class of investors has not capitulated yet."
Stocks roared out of the gate Friday, pointing to gains above 1 percent for the Dow industrials. But steady selling through the day eroded much of those gains, and the blue chip average was struggling to hold a 100-point gain as traders started getting ready to head home for the weekend.
While the long-term landscape still looks positive and no one was lowering price targets, the short-term indicators didn't appear favorable.
Two Bank of America Merrill Lynch gauges showed conflicting signs — one that measured the breadth of global stock trends flashed a buy signal, but the firm's much-followed Bull & Bear Indicator wasn't there yet.
Much like Deshpande, BofAML's chief investment strategist, Michael Hartnett, said there weren't enough capitulation signs yet to get comfortable. Hartnett said he's looking for something similar to the February 2016 buy signal that would come from hedge fund selling and repositioning from commodity trading advisors.