Market Preview: A Bigger Bounce

NEW YORK (TheStreet) -- Seems like it was the long weekend as much as anything brought out the buyers on Tuesday but the road to a bigger bounce gets bumpier from here.

Sam Stovall, chief equity strategist at S&P Capital IQ, expects the U.S. economic data to be favorable this week but notes investors will soon be facing a lull in the headlines on a number of other fronts once the big buildup to Friday's jobs report is over.

"As we head into the final week of trading, investors are hoping for an end-of-month respite before they spend the following two weeks waiting - waiting for the outcome of the Greek national elections that may place the country at increase peril of leaving the euro, waiting for the U.S. Supreme Court to weigh in on the legality of the insurance mandate within the Affordable Care Act, as well as waiting for fresh data from the U.S. and China on the prospects of slowing expansion or renewed recession," he wrote in commentary released early Tuesday.

The historical record for June skews negative with the S&P 500 averaging a decline of 0.4% since 1945, making it the fourth-worst month of the year. In addition, when following a May that features a more than 5% drop, the S&P 500 has averaged an additional decline of another 1.8%, sinking in four of the previous seven instances.

Stovall's advice is for dealing with this waiting game is simple: Play it safe.

"Heavy issues still weigh on investors' minds, much of which won't be cleared up until the second half of the month," he said. "As a result, we see choppy market action as investors jockey for placement just before the announcements. Since we still view the risks to be greater than the potential rewards, we advise investors to maintain a neutral allocation and balanced sector exposure."

Meantime, there was a bit more bullishness out there on Tuesday than has been seen in the past few weeks. Canaccord Genuity was among those speaking up, outlining why it's sticking with a year-end target of 1575 for the S&P 500, a level that implies potential upside of more than 18% from Tuesday's finish at 1332.

Coming off a solid if not stunning earnings season, the firm believes the market is currently in a "well-defined intermediate-term uptrend" and argues that this recent pullback has priced in a U.S. recession that it just doesn't believe will come to pass.