My Comments: You should first note the date when Jeff Benjamin posted these comments. For whatever reason, I saved them and decided this morning would be a good day to bring them to the table again.

What is happening to the DOW and the S&P500 and Russell 2000 is a good thing. In the short term, it makes people uneasy, especially since the debacle of 2008 is always in the back of our minds. However, what’s happening now is an opportunity to take advantage of the dip and then smile as it turns around and starts back up again, as it most assuredly will.

Pullback would likely trigger next big run-up in stocks

By Jeff Benjamin | Mar 24, 2013

By a variety of measures, the U.S. equity market is poised for some kind of a pullback, but that isn’t necessarily a bad thing — a fact that underscores the kind of momentum driving stocks these days.

“I don’t know what it will take to trigger a pullback, but as soon as we get a correction of 3% or 4%, it will be short-lived because that will be an opportunity for more investors to get in,” said Kevin Mahn, president and chief investment officer of Hennion & Walsh Asset Management Co.

Even as stocks showed signs of volatility last week, and with most major U.S. equity indexes at or near record highs on a nominal basis, analysts and professional investors such as Mr. Mahn insist that things are progressing in a normal pattern.

“Right now, investors are looking for any crack or any kind of reason to start taking some profits before the long-awaited pullback,” Mr. Mahn said. “I think investors should reset their expectations in terms of how much more stocks can grow from here.”

In essence, at this point in the cycle a small correction is likely and maybe even necessary, but it isn’t a reason to panic.

“Medium to longer term, I’m pretty comfortable with the stock market, but in the short term we’re going to have some kind of pause,” said Chris Wallis, chief executive and chief investment officer of Vaughan Nelson Investment Management LP.

Although stocks could undergo a sudden correction, the market is already “trying to pause through some consolidation and choppiness that lets it correct with time rather than price,” he said.

In the absence of a major trigger to start a pullback, choppiness will have to do, Mr. Wallis said.

Early last week when the government of Cyprus threatened to tax savings deposits in an effort to help finance a bailout of the nation’s financial system, initial concerns were that such a move could spark a stock market reaction in the United States.

PULLBACK NOT UNEXPECTED

“We’re beginning to hear some whispers and questions of whether, when the Fed finally pulls away the punch bowl, the economy will be able to stand on its own,” Mr. Anderson said. “It’s been more than 500 days since we’ve had a correction of 10% or more, so to have any kind of pause at this point would not be unexpected.”

Paul Schatz, president of Heritage Capital LLC, also thinks that a “healthy correction” is in order, but he calculates as “even money” the chances of the stock market gaining or losing between 5% and 8%.

“I don’t think there are enough warning signs to warrant a full-fledged correction of 10% or more, but we certainly should be closer to one of those garden-variety healthy pullbacks,” he said. “We are getting to the point where emotion and a manic state takes hold, and the higher you push from here without a pullback, the more dangerous and ugly will be the ultimate downside.”