Setting Up for a Shallow Pullback

There's more froth today than in the fanciest of French restaurants, and I think it is beginning to weigh on the overall market. That and the fact that we, once again, can't seem to take out Dow 9600.

We saw this same level of froth -- some would say this one is even more aggressive -- right before that vicious 3% pullback, so I think people are preparing for the same quick selloff. Plus, it looks like that those who came in short-call and therefore short-common have now covered, with not enough new money in.

Once again, I am not betting on a steep decline. I am expecting that we could have a shallow pullback, simply because the pros get cold feet when they see stocks like Citigroup (C - commentary - Trade Now) opening up huge and then pulling back, or stocks like Fannie (FNM - commentary - Trade Now) and Freddie (FRE - commentary - Trade Now), of dubious credibility, flying.

I don't blame them.

I hate froth.

But I also know that once the speculators get killed, a la Citigroup going down as it gets near book and exceeds tangible book -- not that many of the people furiously taking the stock understand book -- then we will recharge and go.

One other thought: The average that a lot of people key on, the Dow Transports, one that I think is important, has reversed, and that's not something that I like to see.

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