(Bloomberg) -- The strategist who predicted retail investors would flock to the U.S. stock market now argues that they are going to face a major test of their staying power from a further pullback in equities.

Corrections of 10% to 20% are common in bull markets and one may well be underway, BTIG LLC Chief Equity and Derivatives Strategist Julian Emanuel wrote in an email after the S&P 500 Index slid 1.7% on Monday.

“The ‘test’ has further to run in our view,” he said, adding such a backdrop would be a contrast to the record-breaking run enjoyed by retail investors since the pandemic lows of March last year.

Retail investors have been a pillar of the bull market, ranging from their ardor for call options to the meme-stock craze that ignited rallies in the likes of GameStop Corp. and AMC Entertainment Holdings Inc. The recent swoon in the S&P 500 on the prospect of reduced stimulus and risks from China is the latest test of their resilience.  

“To the extent that the Fed is more hawkish or yields continue to rise, that could be a near-term challenge to the public’s resoluteness,” Emanuel said. “We suspect they’ll step up and buy the dip, but that remains to be seen.”

Strategists are divided on the outlook after the recent gyrations in markets. A Morgan Stanley team led by Michael Wilson said a plunge of more than 20% in U.S. stocks is looking more possible. But JPMorgan Chase & Co. strategists including Marko Kolanovic have argued Monday drop’s was overdone.

S&P 500 futures climbed 1% and Nasdaq 100 contracts rose 0.9% as of 9 a.m. in London, signaling some stabilization in sentiment after a tough start to the week.

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