The market's wild swings are expected to continue through the summer, analysts say, but investors should take advantage of the volatility instead of fearing it.
"There's no reason to think these 100, 200-point swings won't continue," Rob Brown, chief investment officer at Genworth Financial Asset Management, told CNBC.com. "That provides an investment opportunity."
The markets were roiled all week in a tug of war between better-than-expected corporate earnings and almost daily headlines of trouble in the mortgage and credit markets. Analysts believe these same troubles will plague the markets next week.
"The catalysts are going to continue to be the headlines," said Mark Roach, portfolio manager at Dreman Value Management. "Subprime is at the top of the page, as well as private equity deals. We've had some excesses in mortgage lenders and that will have to shake out."
"The average American is up to their eyeballs in debt," said Greg McCoach, senior analyst with The Mining Speculator. "We're now seeing problems in the real estate and refinance markets, which have kept our economy going for the last five years. If that gets worse, interest rates will have to go up and I think we'll see a recession of some sort."
Shed Weak Sectors
As the markets fluctuate back and forth, many analysts say investors can take advantage of this opportunity to trim certain positions on good days and pick up promising investments on the dips.
"Start by shedding the weakest sectors, such as home builders, mortgage lenders, investment real estate, REITs, most banks and brokerage firms and companies that depend most heavily on these industries," advises Martin Weiss, senior editor of Money and Markets.
Weiss recommends investors consider exchange-traded funds that track foreign stock markets and foreign currencies. He says the Rydex commodity-based ETFs offer ways to play that strategy.
"Even if every stock market in the world goes down, there's almost always at least one major currency that's rising," Weiss noted in a recent "Crash Alert" report.