Wall Street weather forecast: cloudy, with some sunny periods

Today's investment climate, according to the sages of Wall Street, reads like the March weather map: chilly, with periods of warmth - and just as frequently, periods of cold.

Their advice on your financial dress: Don't take off your sweater yet, remain diversified, don't commit yourself too heavily to common stocks, or bonds, or cash, or any other investments. But do take advantage of periods of market weakness to upgrade your investments - or to cut your losses.

Normally conservative Value Line, which has hewn hard for many months to a position that says the market is heading higher, recently reversed its advice to subscribers.

''Hold off buying stocks until further notice,'' it said earlier this month. ''Should the market rally that began Friday, Feb. 24, continue up to the 1,180-1 ,200 area of the Dow, sell some of the stocks to build a cash reserve.''

Such advice has been common at brokerage houses the past few weeks, indicating the confusing crosscurrents that have been raking the stock market. The widespread advice to sell into market rallies (Value Line was worried especially by the impact of a possible decline in the exchange rate of the dollar) seems destined to keep the Dow Jones industrial average from sustaining a new bullish phase in the near future.

But hope springs eternal. In the longer run, virtually all analysts agree, the market is heading higher. John M. Templeton, president of the mutual fund group that bears his name, believes the market will more than double in value by 1988. Fueling much of the increase, he says, will be higher corporate earnings - especially of blue-chip companies - and a projected rise of pension fund assets from $800 billion this year to $3 trillion by 1995.

Mr. Templeton sees the Dow Jones industrial average growing 20 percent per year. He expects bonds, too, to increase in value if inflation remains in the 4 percent range.

Richard Benson of J. J. Lowrey & Co., an investment banking firm, is an unbridled optimist on bonds. He sees ''a good bond-buying opportunity at hand.'' The next big move by the Federal Reserve, he predicts, is ''likely to be an easing move as the economy flattens out in the second and third quarters.''

''Surprises for the bond market,'' Mr. Benson says, ''are likely to be positive . . . . The best bond rally of the year is likely to be on the horizon.''

But technical analysts at most brokerage firms indicate this is still a period of great uncertainty in the stock and bond markets. The federal budget deficit, the trade deficit, and the future of interest rates and of corporate profits are all sources of concern and could cause the market to drop - or at least keep it from rising significantly. But that involves the abstract concept of ''the market'' more than it does individual stocks.

Bucking the trend in this kind of market, a number of advisers say, are stocks of companies that are the targets of mergers or acquisitions (M&A). Gulf Oil has been a good recent example. (details, Page B14). Brokers often call these ''asset plays,'' stocks selling at a discount to the market value of their assets. Oilman and financier T. Boone Pickens Jr. of Amarillo, Texas, saw Gulf as such an asset play and took a run at it. Individual investors can do the same thing, albeit on a smaller scale.

Philip Erlanger of the Advest brokerage firm in Hartford, Conn., looks not only for M&A targets but also looks directly for the targeters - especially the smaller ones. He admires Pickens's Mesa Petroleum for aggressively seeking to benefit its stockholders, either by buying shares of big oil companies or by selling those shares at a profit.

But with stocks, in particular, remember that your principal is at risk. If you invest in fixed-interest vehicles - bonds, money market accounts, simple savings - your principal is protected, and you receive a set return. Sometimes that return is small, even negligible, but you'll get back at least what you put in. With stocks, you receive a total return: price appreciation plus dividends. But in a bad market, dividends can be interrupted and the price of the stock can drop below - well below - what you paid for it.

If you want to take a small amount of risk, says Thom R. Brown of the Philadelphia-based Butcher & Singer securities firm, a good long-term purchase today might be stock in some of the regional phone companies created this year by the breakup of AT&T. Mr. Brown says these companies are fundamentally undervalued in the marketplace, selling below what other independent phone companies sell for.

''With the regional phone companies,'' Brown says, ''I think you'd be able to see capital appreciation, and you'd be paid to wait by the dividends.''

An investor seeking a surer spot for his or her money might consider municipal bonds. In many cases these offer yields of up to 10 percent and no taxes.

Analysts say an investor who already has a working portfolio of stocks, bonds , or both might consider taking advantage of today's market weakness to pick up blue-chip bargains. The best buys are stocks that are good on a fundamental basis - that is, those with sound finances and management and a long history of increasing dividends.

Eric Miller of the Donaldson, Lufkin & Jenrette brokerage agrees that good-quality stocks can be good buys when the market is weak. If, however, some of your money is in a money market fund, Mr. Miller does not advise diverting it to common stocks. He is especially concerned that individual investors might not have the time or the information to track stocks in volatile sectors such as high-tech.

''If you've got stocks, continue to hold them,'' says James Balog of the Drexel Burnham Lambert brokerage. ''What happened (the slide in the first six weeks of 1984) has been an aberration. If you buy, you'll want the big names. These give you high liquidity.''

What to do in today's hot and cold investment climate? The short answer seems to be: Minimize your risks, but remember that just as the seasons change, so does the stock market. A prudent investment for spring or summer, this year or next, might be made today.