So the question is: Will the anxiety of the folks on the sidelines to buy on any dip outweigh the anxiety of the longs to protect and harvest profits? The answer to this question will determine the short-term trend of the stock market.
Currently, my short-term outlook is for the pullback to find fairly strong technical support in the area of 1470 to 1500 on the S&P 500 index. The pullback could pause or bounce in the 1530 area, where there is some horizontal support and the 50-day moving average, prior to entering the target zone.
A strong negative fundamental catalyst would probably be required for the stock market to correct beyond that technical target area. If there were such a fundamental catalyst, the next support areas would be found at around 1460, 1400 and 1350. At that point, we would be talking about a correction rather than a mere pullback.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.