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The nosedive in stocks yesterday had lots of the hallmarks of the kind of healthy shakeout strategists like to see remove the froth from the market.

The Nasdaq 100 (NDX) (NASDAQ:QQQ) fell more than 5% and the S&P 500 (SP500) (SPY) fell more than 3.5%.

But eToro strategist Ben Laidler says those looking to put cash to work still need to be selective.

"Investors are panicked by the Fed’s unprecedented double-barreled hiking cycle and balance sheet run off, and Bank of England’s stark ‘stagflation forecast of 10% inflation and recession by end of this year in a G7 economy," Laidler wrote in a note Friday "Risks are manifold across US, Europe, and China, whilst valuations provide little overall support yet."

"But we see room for ‘less bad’ news from peaking 8.5% inflation and an already hawkish 3.5% rate cycle, with earnings resilient, sentiment very depressed, and good risk/reward to buying ‘corrections’ or ‘4% down-days’ over 12 months," he said.

"We strongly focus on cheap Value and cash-flow defensives. It’s too early for tech."

The S&P is off 14% from its high coming into the year.

"This is nearing the magnitude of the average -17% ‘correction’ and has lasted longer," Laidler said. "The risk/reward to buying this typical correction over the following 12-months is strongly positive. Similarly, buying the rare (around once every 18 months) large '4%' down day we near saw yesterday has a c20% average 1-year return."

The 10-year Treasury yield (TBT) (TLT) is moving higher this morning, up 2 basis points to 3.09%, but still off yesterday's highs.

"Our ‘fair value’ P/E has further downside risk," Laidler added. "Bond yields will not rise forever, but we are in uncharted territory with Fed’s massive balance sheet roll off. By contrast earnings continue to deliver, up 10% in the US and 35% in Europe in Q1, and resilient to the macro maelstrom for now."

"It’s too early for tech, until bond yields peak. After the 2000 ‘tech bubble’ Growth lagged Value for 3 years."

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