Investors face a dilemma in the midst of headlines from the U.S.-Iran war seemingly changing by the hour: Risks of all sorts persist in a stock market that’s still near all-time highs, making it difficult to decide where to go and what to do.

The major averages rose Tuesday, building on their Monday comeback when stocks staged a massive reversal after President Trump said “the war is very complete, pretty much.” Those remarks helped to whipsaw the market, with the S&P 500 ending the session higher by 0.8% after falling as much as 1.5% earlier in the day.

Even with those gains, some investors are skeptical that the all-clear has sounded. Not only is the S&P 500 just 2.5% below its all-time high, expectations of future volatility are high. The VIX — Wall Street’s fear gauge, and calculated based on real-time S&P 500 options prices — was last above 20, after nearing 30 on Friday.

“While the Trump interview with CBS News and the press conference in Doral, Florida seemed to suggest an early end to the war, he could not provide a date — ‘not this week,’ he said,” Komal Sri-Kumar, president at Sri-Kumar Global Strategies, told CNBC. “Also, the naming of the hardline son of Khamanei as the next Iranian leader suggests that they are digging in for a long war.”

‘Correction could resume’

“So, after the steep fall in oil prices [Monday] and pickup in equity prices, the correction could resume,” Sri-Kumar added.

Sri-Kumar, the former chief global strategist at TCW, is bearish on both the U.S. economy and the stock market. His base line assumption is that stagflation is coming, a period marked by low economic growth and stubbornly high price pressures — a forecast he’s held since September.

Given his weak economic outlook, coupled with high equity valuations, an ongoing war and lingering concerns over the health of private credit, Sri-Kumar said investors should lower their exposure to equities. Traders could position defensively in energy and health care stocks, he added. Within Treasurys, he’s sticking to shorter duration bills and notes.

Sri-Kumar, whose firm provides macroeconomic consulting, thinks stocks could overshoot to the downside by 15% to 20% before traders step in to scoop up oversold names.

“Wait until there is blood on the street, and when you see blood on the street, rush in,” Sri-Kumar said.

Not everyone holds the same view.

On Tuesday, Max Kettner, chief multi-asset strategist at HSBC, upgraded equities to “max” overweight, saying the worst fears around the Iran oil spike are now behind investors.

Nevertheless, the strategist held the same view as others that investors should stick to stocks that have been oversold the most during this latest slide. He expressed a preference for Asia and Europe over the U.S., and is overweight Japan equities.

Software is one area that may hold bargains after its recent steep decline. Deutsche Bank Research, for one, argued there is now a buying opportunity in the sector after last month’s selloff.