The S&P 500 hit a record high this week, but that may not last for long, according to analysts at Piper Jaffray.

They say the market is poised for a correction that will take the index down to as low as 1,600 before the bull market resumes. That would represent about a 16 percent correction from Tuesday's close of 1,897.45.

"At this juncture, we believe [a] stealth correction in the broader market is leading to a false sense of security," the analysts, including by technical market strategist Craig Johnson, write in a commentary obtained by CNBC.

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"The combination of a clear rotation toward defensive stocks and sectors, easing 10-year bond yields and narrowing market breadth should not be ignored."

So what's going to push stocks down?

The market's historical weakness in mid-term election years and low bond yields, which signal a weak economy, the analysts say.

The 10-year Treasury yield stood at 2.58 percent late Tuesday, down from 3.04 percent Dec. 31.

To be sure, once the S&P 500 bottoms, it will rebound to 2,100 by year-end, the Piper Jaffray team says. That would mean a 31 percent rebound from 1,600.

"We believe this correction will help reset investors' expectations and create an attractive entry point for what we believe will be a strong finish to 2014."

Meanwhile, Edward Chancellor, a strategist at money management firm GMO, believes U.S. stock prices are at bubble levels, because "most of the conditions under which earlier bubbles have appeared are present in the U.S. markets today."

Among those conditions are "irrational exuberance, Ponzi finance and overblown growth stories," he writes in GMO's quarterly letter to investors.

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