The Pullback to Buy is Here. But the Pundits Will Worry.

The pause to mild pullback eliminated the pause as the bears sunk their teeth into the markets a little deeper on Thursday. The March 4 peak and reversal day I referenced a few days ago now has a bit more significance although indices saw their highs on February 25. I am traveling so I won’t get to pay enough attention to the chatter, but I am guessing there will be some focus on the S&P 500 falling back to its average price of the last 200 days. Ignore it. It’s nonsense in here because the line is now flat, price can whipsaw around it and the other major stock market indices are no longer all lined up.

The S&P 400 and Russell 2000 continue to be the weakest indices, showing a clear “risk off” trend. That flies in the face of conventional wisdom because the dollar has been very strong which should hurt the huge, multinational companies and help those with the most domestic exposure. In other words, the mid cap and small cap indices should be getting a little tailwind over the large and mega cap indices. But as we know, conventional wisdom doesn’t always play out as expected in the markets.

Lots of chatter lately about the Dow Transports below and how much weaker they are than the Dow Industrials. Pundits have almost universally concluded negative consequences. But the data don’t bear that out. More on this next week as it’s time to leave Fort Lauderdale and head up to Orlando.

The theme for Friday should be weakness out of the gate. I fully expect the bulls to put up a stand later this morning or right after lunch. The key will come after that when the bears try to knock the markets to new lows. I think a low is coming sooner than later and the big post-Christmas rally ain’t over yet. All those people who have been waiting and waiting for the pullback to buy will probably miss the boat in here as they always do. Now, they will worry that stocks are about to collapse. I am certainly ready to commit the dry powder I have.