The stock market is in the "perfect place" for a struggle between support from the Federal Reserve and the economic issues facing the United States, and investors should wait for signs that the Fed is winning before buying in, Canaccord Genuity chief market strategist Tony Dwyer said Monday.
"I'm looking to get offensive, not defensive, but you need signs first," Dwyer said on "Fast Money."
That reliance on the biggest tech stocks is one of the things that needs to change before Canaccord Genuity tells investors it's time to jump in, Dwyer said.
"I could see a situation where the S&P 500 index itself doesn't do a whole heck of a lot, but you start to see the rotation underneath," Dwyer said, pointing to financials and industrials as sectors he would expect to surge if the market is going to go higher.
The central bank's actions, including taking an unprecedented step into the high yield corporate bond market by saying it can buy ETFs of those securities, put a floor under the market, Dwyer said. The S&P 500 on Monday closed about 50 points above where it closed on April 8, the day before the Fed announced its expanded bond-buying programs.
Investors could also watch the Treasury market for a signal that it might be time to buy stocks, the strategist said.
"You would want to see the U.S. Treasury market have a pretty significant uptick in yields, suggesting that it's betting on an economic recovery," Dwyer said.