NEW YORK (CNN/Money) - The stock market rally celebrated its one-year birthday Friday with an up session taking the edge off of a brutal week and two months of inertia on Wall Street. But on Monday the sellers were back as terror fears once again came to the forefront and the latest economic news was tepid.

All of which has got analysts and market participants asking, 'is the rally over?'

A three-year bear market began to turn around toward the end of 2002, but the market still closed in the red that year. Early 2003 was marred by jittery trade as investors waited for news on whether the war in Iraq would go forward. Once that uncertainty was removed, investors started to dip back into some of the stocks they had avoided.

Beginning with an afternoon rally on March 12, 2003, stocks rallied all the way through the end of January this year. Between the March 12 intraday low, and January 22, 2004, the Dow gained 43 percent.

But since then, the blue chip average has fallen 3.5 percent, most of it this week. As of Friday's close, both the Dow and the Nasdaq are in the red for the year, and the S&P's gains are hair-thin.

With evidence growing over the weekend that al Qaeda may have been behind the deadly terrorist attack in Madrid last week, concerns grew on Wall Street and with them the selling resumed. By midmorning Monday, the Nasdaq was down more than 1 percent, with the Dow and S&P 500 not far behind.

This does not mean the rally is over, analysts say. Rather, all the selling the market has seen has been a part of a natural and necessary pullback.

"I think this is another correction within an ongoing bull market, rather than something more substantial," said Charles Blood, director of financial markets and economic analysis at Brown Brothers Harriman.

"The earnings story is good and is likely to remain very good, and the economic conditions are likely to remain supportive," Blood added. "It's certainly not going to go straight up beyond this period, but I think we're about two-thirds of the way through this correction."

While the pace of stock gains in 2004 is unlikely to match the pace of the rally in 2003, analysts say that 2004 is still primed to be an up year for Wall Street.

However, in the short-term, over the next month or two, sideways to lower trading is likely to continue, analysts say. (For events that could impact trading in the week ahead, click here.)

"I'd expect to see another month or two of this consolidation," said Jon Burnham, portfolio manager at Burnham & Co.

Here are some of the issues investors are dealing with as the market churns in this transitional phase, as well as some strategies for success while it lasts.

Technology has been the rally's big hero. But over the past two months, the Nasdaq has tumbled seven out of eight weeks. Market watchers are saying the tech sector has more retreating to do and a much awaited sector rotation out of tech stocks and into other sectors is likely to continue in the short term. For a detailed look at where the money that's been coming out of tech has been going, and where tech is likely to go in the months ahead, click here.

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In addition to technology shares, small-cap stocks in a variety of sectors helped bolster the rally, with the Russell 2000, the most widely-known index of small caps, having gained more than 47 percent in 2003. But it is perhaps too late to get into them. For a look at the role of small caps in the rally and the current period of consolidation, click here.

One of the short-term risks is that investors, eager to get back in the game, may be getting too exuberant, setting themselves up for a fall.

One place where the rally hasn't let up is the bond market. With the job situation still murky and stocks in a pullback, and with the Fed unlikely to raise interest rates at next week's meeting or any time soon, bonds have been on a roll.

Still, any signs that the labor market recovery is beginning to take place, as well as data showing the economy is still growing strongly, could upset the bond bulls' party. For a detailed outlook on the Fed, bonds and interest rates, click here.

Concerns about the presidential election and what it will mean for the tax cuts and other fiscal stimulus should George Bush lose, could weigh on stocks.

But traditionally, election years tend to be good for the markets as the party in power tends to do what it can to stay in power. The S&P 500 has gained consistently for the last seven months of 12 out of the last 13 election cycles.

Although valuations right now may be higher than the historical average, with interest rates and inflation likely to remain low, and renewed strength in the economy and labor market brewing, there's still some room for the bull to move.

Even as the market stalls, there are still stocks and funds that offer solid returns. For ideas on how to build your portfolio around a core of high-quality growth stocks and how to broaden your stock mix as much as possible, click here.

• Reads on manufacturing are due throughout the week including the NY Empire State index on Monday, expected to show a drop to 38.9 in March from 42.05 in February, according to Briefing.com estimates. On Thursday, the Philadelphia Fed index is thought to have fallen to 29.5 from 31.4 last month.
• Tuesday the Federal Reserve meets to discuss interest rates. But with the weaker-than-expected February payrolls report in the recent past, the central bank is not expected to boost rates. The target for the Fed funds rate currently stands at 1 percent, a more than 40-year low.
• Banking sector earnings are due throughout the week. Lehman Bros. (LEH: Research, Estimates), due Tuesday, is thought to have earned $1.64 per share, according to First Call estimates, versus $1.15 a year earlier. On Wednesday, Bear Stearns (BSC: Research, Estimates) is expected to report earnings of $2.02 per share, up from $2 a year earlier. On Thursday, Morgan Stanley (MWD: Research, Estimates) is expected to say it earned 95 cents per share, up from 82 cents a year earlier.
• Also on Thursday, the index of leading economic indicators is due from the Conference Board. Economists surveyed by Briefing.com think it rose 0.1 percent in February after rising 0.5 percent in January.