Markets (^DJI, ^IXIC, ^GSPC) closed Monday's session relatively flat as Wall Street braces for a big week of economic data ahead. The Bahnsen Group CIO David Bahnsen joins Market Domination Overtime to discuss the state of the markets and how investors can best position their portfolios amid uncertainty.

"I think that there is the potential for some of the economic data this week to move markets. But I really think it's important for investors to make a distinction between the markets responding to economic data substantively and non-substantively. What I mean by that is a quick knee-jerk out of a jobless claims on Thursday is very difficult for any of us to know what the market's actually responding to when you're dealing with the Fed and the pending changes, when you're dealing with an overstretched, highly valued market with the geopolitical tensions," Bahnsen explains.

He does not believe that economic data has been the biggest mover of markets, and instead points to a combination of factors.

"We know where the yen carry trade unwind was at the height of the drama. But when you add in earnings season, when you add in a 22 times S&P, you just have vulnerability that may or may not be linked to macroeconomic," Bahnsen tells Yahoo Finance.

As the tech sector, in particular, came under pressure last week, Bahnsen says, "Even if valuations came down a little bit, I would think people are going to face less pain once valuations come down. I think there's going to be significant pain that those who are overweight into that space, which at this point, as you know, includes all S&P 500 investors." Thus, he encourages investors to focus on cash flow and balance sheet strength.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Melanie Riehl