Bottom for stocks may be in: street

Following a recent selloff in U.S. equities, market watchers believe a bottom may be in, clearing the way for stocks to continue their march higher. Since reaching an intraday high of 2,103

on Tuesday of last week, the S & P 500 plunged as much as 11 percent over the next four sessions, hitting a low of 1,867 on Monday. In the past two days, however, the S & P rallied a

total of 6.4 percent, recovering most of its losses in the previous sessions and logging its best two-day gain since March 2009. "Since 1940, we count 10 other periods when the S &

P 500 fell by at least 10 percent in just four days. Afterward, it usually went up," said Barclays' head of U.S. equity strategy research, Jonathan Glionna, in a note to clients

Wednesday. Despite the increased volatility this week, Glionna also stuck to Barclays' year-end price target of 2,100 for the S & P, predicting a 6 percent gain from here. As the

rebound gains traction, the strategist thinks there are certain areas of the market that perform best during bouncebacks similar to the one in the past two days. Read More 10 oversold stocks

ready to pop Since 1940, the S & P posted positive returns during the five days after a 10 percent decline, up on average 4.3 percent, according to data from Barclays. Regardless of a

short-term dip in 3 out of 10 occasions, analysts at Barclays said that in the long term, the index was mostly higher, up on average 20 percent 250 trading days after a correction. Among the

S & P sectors, financials tended to lead the initial rebound, while medium-term outperformance came from telecoms, utilities and health care, according to Barclays. In the long term,

information technology and consumer discretionary stocks posted the biggest returns, up on average 25 percent and 11 percent, respectively, 250 days after a selloff. In contrast, over that

time period consumer staples and utilities companies were among the worst performers, down on average 14 percent, Barclays' findings show. "This indicates that selloffs such as the

one being experienced have not historically signaled that defensive sectors will produce the highest returns over the next year," said Glionna, advising investors to stick with growth

stocks. The rally in the past two days appears to be an indication that an early bottom may be in place, investors said. Read More 4 hedgies on how to play volatility "We felt that if

we were in a waterfall, the market should not rally for one day and a half. We think perhaps that if we get another upside explosion in volume (Thursday) that might mean the bottoms have

been made," said Bruce Bittles, chief investment strategist at RW Baird, which has $120 billion in assets under management. As of Thursday afternoon, NYSE composite trading volume stood

at 2.9 billion shares, on pace to match this year's average daily volume of 3.56 billion shares. Historical data also support the establishment of a bottom in the near term. Analysis

of 10 percent corrections by Fundstrat's Thomas Lee found that "once markets fall through a 10 percent correction, 12 of 28 bottom within a week, nine of which are simultaneous

with a 10 percent decline." "Overall, the median number of days to a bottom is 15 and the median further decline to a closing low is 3 percent," he said in a Tuesday report.

To be sure, uncertainty over the impact of slowing growth in China and emerging markets—a major factor behind the investor psychology that set off the declines—remains unresolved. "The

greatest risk is that China slips into a recession that drags the global economy into a recession," Lee said in the note.