Is the worst over?
Since the market's recent selloff began Feb. 27, stocks have been slowly climbing their way back. But most analysts think the market is due for further declines, though not necessarily huge ones.
"I don't believe it's over, no," Steve Chapman, Vice President of Weiss Capital Management, told CNBC.com. "We're going to have to test last week's lows before people are going to confidently get back on the bandwagon. It could very well happen in another week or in two months, but, I think, it will definitely happen."
"There's a chance we may still be in an overbought condition and I wouldn't be surprised to see another four or five percent drop," said David Joy, Chief Market Strategist at RiverSource Investments. "I would expect that to unfold in a choppy pattern perhaps over the next couple of months."
Jump Back In
But even if the market does drop further, some market pros think investors should be ready to jump back in.
"It's time to start getting interested in stocks again," said Andrew Burkly, Market Strategist at Brown Brothers Harriman. He believes the market decline is in its later stages and he's calling for a "bull market extension."
"Basically before the dip, we looked at a lot of the fundamental factors for the market and the technical factors and everything looked very strong coming off of those highs," Burkly told CNBC. "When you come off of fully confirmed levels like that, it tells us that we really want to be looking to buy the dip."
Some analysts think we could be in for a slow, gradual decline before the market finally turns higher.
"Last year, we had a similar market to this from May 10 to June 13," Brian Gendreau, Investment Strategist at ING Investment Management, told CNBC.com. "It could last that long again. But if I went out on a limb, I'd say the worst is over. The volatility index indicates the market is settling down and people don't seem to be pricing high levels of volatility into the market."
Waiting for a "Scary" Selloff
Although it's always impossible to tell when the market actually hits bottom, some analysts feel the market may need another sharp jolt before traders truly believe the correction has run its course.
"It seems like when Wall Street goes high it goes too high and when it goes low it goes too low," said Chapman. "We really haven't seen that scary, almost emotional selloff, that it usually takes to establish a bottom."
"I don't believe that we necessarily need a panic sell, but we need to get to a position where the market is oversold and we're not there yet," said Joy.
Next week, investors will get more inflation data including the Producer Price Index and the Consumer Price Index reports, as well as a reading on consumer sentiment. Analysts say to look for telltale signs about the economy to drive the market in the weeks ahead.
"We're going to see these zigs and zags," Joseph Quinlan, Chief Market Strategist at Bank of America, told CNBC. "We're driven by data right now and when the data is good, you're seeing the market go up, but we'll see more weakness later on. Watch inflation, watch wages. The Fed is going to speak later this month. There's a lot to keep this market range-bound."
"Keep Some Dry Powder"
Whether they believe the correction is near an end or not, analysts agree this is a good time to reassess your portfolio and take advantage of opportunities.
"I would keep some dry powder on hand by keeping cash positions a little bit higher," said Chapman. "I don't think the other shoe has dropped yet, so I would caution new money to be careful. I recommend higher-quality defensive stocks such as consumer staples because people still have to eat."
"I suggest you wait a week or two," said Gendreau. "Let's see if we get several good days of increases in the Dow, if oil stays down and if there continues to be little evidence of any kind of major dislocation in the economy. If the market settles down, we see that as a buying opportunity."
"If you made money in the emerging markets, take some profits, particularly out of India, Turkey, even China," said Quinlan. "Rotate that money back home and put it in large-cap stocks here in the U.S."
"I'd look at areas that have lagged a little bit," said Burkly. "Certain areas within the industrials like the machinery stocks and the road and rail stocks that were doing well this week, but are still well below their highs from last year."
"If you are long-term, you probably don't need to do too much," said Joy. "Make sure you are in high-quality assets and stay the course."